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Anand Rathi
Hindustan Aeronautics (Buy)
Target: ₹1,152
CMP: ₹943.70
Hindustan Aeronautics is engaged in the business of manufacture of aircraft and helicopters and repair, maintenance of aircraft and helicopters. HAL is one of the premier defence PSU in India along with Defence Research & Development Organization (DRDO) and has over the years showcased research, design and development capabilities with the successful development of military aircraft and helicopters.
Other than the indigenous aircraft and helicopters, HAL has also manufactured aircraft under license including the MiG 21FL/M/BIS, MiG-27, Dornier 228, Su-30 MkI, Hawk Mk 132 aircraft etc.
HAL derives approximately 93 per cent of sales from Indian Defence Services and export its products and services, primarily spares to more than 21 countries. HAL’s revenue from operations grew from ₹15,938 crore in the FY15 to ₹21,438 crore in the FY20, representing a CAGR of 6.1 per cent contributing from all the segments.
As of September 30, 2020, the company has cash and cash equivalents of ₹213 crore. The company does not have any long-term indebtedness. HAL has a record of continuous dividend distribution for over four decades, reflecting strong financial track record.
We note that HAL’s capabilities in manufacturing and servicing of defense aircraft and helicopters makes it a direct comparable to established International defense players.
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