Hindustan Aeronautics Limited (HAL) has wrapped up FY25 with a strong performance, securing major defence orders and accelerating revenue growth. The Indian government has approved a ₹62,700 crore order for 156 Light Combat Helicopters (LCH) Prachand, a move that has surprised analysts both in terms of value and timing. UBS had earlier estimated the order to be around ₹45,000 crore and expected approval only by Q1 FY26. Execution of the order is set to begin in the third year post-award, with completion over five years. The financial impact is expected to reflect in HAL’s earnings from FY28 onwards. With an annual production capacity of 30 LCHs, HAL is well-positioned to meet the delivery timeline. The LCH Prachand, featuring 65% indigenous components, further strengthens India’s domestic defence manufacturing ecosystem.
Tejas Production to Drive Growth Over Next Three Years
HAL’s financial outlook is also bolstered by the ramp-up in deliveries of the LCA Tejas Mark 1A fighter jets. General Electric (GE) has delivered the first F404 engine and is now accelerating production, targeting 11 more in 2025 and 20 in 2026. This has led analysts to revise their production estimates for Tejas, increasing deliveries from 4 to 7 units in FY26 and from 6 to 14 units in FY27. As a result, HAL’s revenue and earnings projections for FY26 and FY27 have been revised upwards by 3% each.
Faster Defence Procurement Signals Policy Shift
The Indian government’s recent acceleration in defence procurement is seen as a key driver of HAL’s growth. The swift resolution of GE engine supply issues, fast-tracking of the LCH Prachand order, and the clearance of ₹54,000 crore in new approvals indicate a shift towards more proactive decision-making. Analysts believe FY26 could be a turning point for India’s defence procurement, countering concerns that a slowdown in government capital expenditure could impact the sector.
HAL Remains Top Pick for Investors, Price Target Raised
With improved visibility on order execution and robust financial projections, analysts have raised HAL’s 12-month forward price-to-earnings multiple from 32x to 35x, still at a 10% discount to Bharat Electronics Limited (BHE). The price target for HAL has been revised to ₹5,440 per share. Despite ongoing discussions about India’s potential procurement of fifth-generation fighter jets through Foreign Military Sales (FMS), analysts believe the impact on HAL’s total addressable market will be minimal. HAL remains the preferred pick in the broader industrial coverage, given its strong order book and execution capabilities.
