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Investing.com - CLSA has reiterated its Outperform rating and INR5,436.00 price target on Hindustan Aeronautics Ltd (NSE:HIAE) (NSE:HAL) following the Indian government’s approval of the company’s largest-ever order.
The government approved an order for 97 LCA Mk 1A fighter aircraft worth Rs670bn (US$7.8bn), putting to rest speculation about potential delays in repeat orders. CLSA notes this approval confirms that previous delivery delays were not HAL’s fault but were caused by engine supply issues from GE.
This new order is expected to add approximately 35% to HAL’s existing US$22bn backlog and generate over US$1bn in cash advances for the company. The aerospace manufacturer maintains a healthy decadal pipeline valued at US$54bn.
CLSA identifies large fighter aircraft orders in 2025 and visibility on GE engine deals as key catalysts for the stock. The firm believes HAL’s premium valuation compared to global aerospace peers is justified given its Make-in-India pipeline and market access.
Potential risks highlighted by CLSA include a shift in key aerospace programs to public-private partnerships and the challenge of sustaining high margins, though the firm maintains HAL is currently the cheapest pure-play defense stock in its coverage.
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