Hindustan Aeronautics Q4 Results Review - Well-Positioned To Capitalise On Opportunities: Nirmal Bang

Nirmal Bang Report

The deviation in the absolute Ebitda by ~75% (consensus at 80%) from the actual versus our estimate was on account of revenue and total costs at +7.5% and (14%).

Hindustan Aeronautics Ltd.'s management has guided for:

• revenue growth of 15-18% during FY25-FY28 and repair and overhaul at 9-10% - in line with our estimates.

• HAL is focusing on cost optimisation and improving profitability margins. Manpower cost is down from 23% of revenue in FY19 to 17% in FY24, with a further reduction to 16% of revenue in FY25.

• inventory days and debtor days declined to 159 and 55 days in FY24; the company expects to maintain this optimum level.

• Overhead expenses as a % of sales declined to 4.66% in FY24 from 8% in FY19.

HAL is in good position in terms of the order book; we are positive that execution will only pick up from here. The stock has seen a sharp run-up in the previous two quarters. We upgrade to “Buy” and value it at 29 times March-26E EPS with a target price of Rs 5,469.

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