HAL shares hit annual high after defense acquisition nod boosts investor confidence

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HAL shares hit annual high after defense acquisition nod boosts investor confidence
Credit: © Reuters.

INDIA - Hindustan Aeronautics (NS: HIAE ) Limited (HAL) shares soared to a new annual high on the Bombay Stock Exchange (BSE), reaching ₹2,499 today, following the Defense Acquisition Council's (DAC) approval for significant defense purchases. The company's stock, which closed the previous session at ₹2,382.30, maintained strong performance throughout the day, trading at ₹2,467.

The surge in HAL's share price comes on the heels of a six-day rally, which saw the stock climb nearly 17%, significantly outpacing the Sensex 's monthly increase. Over the same period, HAL's value jumped by over a third, reflecting robust investor confidence in the company's prospects.

This bullish trend was catalyzed by the DAC's recent endorsement for the procurement of Light Combat Helicopters (LCH) and Light Combat Aircraft (LCA) Mk1A from HAL for the Indian Air Force and the Army. The approval falls under the Buy (Indian-IDDM) category, which prioritizes indigenous defense manufacturing.

The Sensex itself experienced an upswing, adding 279 points, but HAL's performance was particularly notable, with its stock growing 29% over the month, eclipsing the Sensex's rise by a considerable margin. The recent revisions in the Defense Acquisition Procedure (DAP) policy now require military purchases to have at least 50% of their content sourced from within the country.

In parallel, HAL has announced upcoming upgrades to the SU-30 MKI fighters, further underscoring the company's integral role in India's defense sector. The DAC's endorsement of capital acquisitions worth ₹2.23 lakh crore, primarily from local sources, has significantly contributed to the positive sentiment surrounding HAL.

Adding to the favorable outlook, Morgan Stanley (NYSE: MS ) has maintained an 'Overweight' stance on HAL stocks, with a target price set at ₹2,182 (USD1 = INR83.336) per share.

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