This PSU is flying high; know why?

Recently, Hindustan Aeronautics Limited (HAL) announced many projects that not only have proved to be beneficial for them but also have brought this PSU under the radar of many analysts.

Hindustan Aeronautics Limited (HAL) is one of Asia's largest aerospace companies, based in Bengaluru. The company was formed by the merger of Hindustan Aircraft Limited with Aeronautics India Limited and Aircraft Manufacturing Depot, Kanpur. HAL is associated with the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. The company has been set up to meet the requirement of the Indian Defence Forces (namely Indian Airforce, Indian Navy, Indian Army and Coast Guard) in the area of Aerospace.

In April 2022, HAL announced various initiatives that made this mid-cap company trending amongst its peers.

Here’s a summary of these initiatives: On 4 April, it handed over the Gaganyaan hardware to ISRO. On 5 April, HAL paid the second interim dividend of Rs 653.36 crore for FY 2021-22 to the Government of India. On 6 April, it entered into an MoU with Israel Aerospace Industries (IAI) to convert Civil (Passenger) aircraft to Multi Mission Tanker Transport (MMTT) aircraft in India. On 11 April, it signed a contract with the Nigerian Army for imparting Phase-II flying training on Chetak Helicopter for six officers of Nigerian Army Aviation. On 26 April, it signed a contract for co-development and co-production of Long-Range Dual Band Infra-Red Search and Track System (IRST) for Su-30 MKI under the MAKE-II procedure of Defence Acquisition Procedure (DAP) 2020, as part of the ‘Make in India’ initiative.

On 27 April, HAL commenced the Main Airframe Fatigue Test (MAFT) of LCA Mk1 airframe at its Ground Test Centre of the Aircraft Research and Design Centre (ARDC) in Bengaluru.

Besides, in wake of the Russia Ukraine war, countries strengthening their defence are likely to spend more on their defence. The war has also opened opportunities in the export market for such companies.

The current war situation along with these initiatives have made this PSU stock attractive and despite the market volatility they have received a positive response from investors and since then the share price has rallied. On Wednesday, the share price ended at Rs 1587.90 witnessing a 0.76% gain. The 52-week high is 1757.55 and the 52-week low is Rs 942.50.