HAL said the impact due to Covid-19 will be 'minimal' for the company as major portion of the company’s revenue is generated from Defense services. Moreover, the Ministry of Defence had extended the contractual delivery date for a period of 4 months (March 25, 2020 to July 24, 2020) due to force majeure, it said.
"Impact (of Covid-19) on the future business in the long term is not anticipated currently," it said.
At 10:35 AM, the stock was trading 1.14 per cent higher at Rs 1,287.90 as compared to 0.44 per cent gain in the S&P BSE Sensex. Around 5.01 lakh shares have changed hands on the NSe and BSE so far. The stock was trading close to its 52-week high level of Rs 1,423.55, hit on August 14, 2020.
Defence-related stocks have been in focus at the bourses recently after the Ministry of Defence, on August 9, announced a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative.
“This decision will offer a great opportunity to the Indian defence industry to manufacture items on the negative list by using its own design and development capabilities or adopting the technologies designed and developed by the Defence R&D Organisation to meet the requirements of the Armed Forces,” Defence Minister Rajnath Singh had tweeted.
The announcement came soon after the Ministry of Defence came out with the draft Defence Production & Export Promotion Policy (DPEPP) 2020 to provide thrust to India’s defence production capabilities and promote exports.
Analysts at ICICI Securities said that while the government's intent with the policy was good, the execution on ground would define its success.
"This would provide significant thrust to defence manufacturing companies in scaling up their production capabilities in long term. Companies like L&T, Bharat Electronics (BEL) and Cochin Shipyard (CSL) having strong indigenous capabilities are likely to benefit from this policy in the long run. However, the intent on the paper is good but the execution on ground in terms of rapid indigenisation, pick-up in ordering, allocation of funds to defence capital expenditure would be key monitorables to achieve the desired objectives of the policy," it said.
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