Hindustan Aeronautics rises 6%, nears 52-week high post Q4 results

Shares of Hindustan Aeronautics Limited (HAL) soared as much as 6.8 per cent to Rs 1,360 on the BSE on Wednesday after the company registerd a marginal increase in its consolidated revenue for March quarter of FY20 (Q4FY20).

The state-owned aerospace and defence company's revenue increased 0.8 per cent year-on-year (YoY) to Rs 10,239 crore from Rs 10,149 crore in the year-ago quarter. Net profit for the quarter fell by 1 per cent YoY to Rs 1,226 crore from Rs 1,238.9 crore in Q4FY19.

On the operational front, HAL's earnings before interest, tax, depreciation, and ammortisation (Ebitda) came in at Rs 2,470.8 crore as compared to Rs 2,599.6 crore in the year-ago period. Ebitda margins contracted 150 basis points (bps) to 24.1 per cent.

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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel