Unpacking HAL’s 3.86% Surge – What’s Fueling the Momentum?

The Indian benchmark indices continued their upward trend on 18th March 2025, with NIFTY 1.45% higher at 22,834.30 points and SENSEX 1.53% higher at 75,301.26. Amidst the positive trends, one of the noteworthy surges was of HAL (Hindustan Aeronautics Limited). HAL share price climbed 3.86% as the market closed on 18th March 2025.

What also caught the attention was the rise in the stock’s trading volume. What caused the price rise, and why did the trading volume increase? Let’s decode.

HAL Company Overview:

Hindustan Aeronautics Ltd (HAL) is an Indian aerospace and defense company engaged in designing, developing, and manufacturing aircraft, helicopters, engines, avionics, and aerospace equipment. It also provides repair, maintenance, and upgrade services for military aircraft.

The company was established as Hindustan Aircraft Limited on 23rd December 1940 in Bangalore by Shri Walchand Hirachand in collaboration with the Government of Mysore. The Government of India became a shareholder in 1941 and took over management in 1942. In 1951, the company was placed under the Ministry of Defence. HAL serves the Indian Armed Forces, DRDO, ISRO, Boeing, Airbus, and other organizations through its production facilities and research centers.

In FY2024, the company undertook the following new initiatives:

• HAL signed an MoU with General Electric, USA, on 6th June 2023 for the Transfer of Technology (ToT) and manufacturing of GE-414 aero-engines in India for the LCA MK2 aircraft.
• A Do-228 aircraft completed a flight with 10% blended bio-fuel from 15th to 27th September 2023 as part of efforts to reduce carbon emissions.
• HAL signed a contract with Airbus, France, on 9th November 2023 to establish up to six yearly C-Checks facilities for A-320 family aircraft at Nasik, supporting the Make-in-India mission and expanding into the civil MRO sector.

Source: Annual Report

Financial Overview of HAL:

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As of the financial year ending March 2024, the company’s revenue from operations increased by 12.82%, reaching Rs.30,380.84 crore, compared to Rs.26,927.46 crore in the previous year. The turnover grew by 7% to Rs.28,161.85 crore, while Profit Before Tax (PBT) surged by 57% to Rs.10,198.97 crore. The Profit After Tax (PAT) rose by 31%, reaching Rs.7,595.45 crore, compared to Rs.5,811.17 crore in the previous year. 

Additionally, the company had no short-term or long-term borrowings. The company’s order book stood at Rs.94,129 crore, with over Rs.19,000 crore in manufacturing contracts and Rs.15,000 crore in Repair and Overhaul (ROH) contracts received during the year.

Source: Annual Report

HAL Share Price:

HAL share price increased by 3.86% yesterday and as of 11 a.m. today, 19th March 2025, the prices have soared again by 2.74% already. 

During the last few days, HAL’s share price dropped following the news of a wrong payment made by the company. However, the dip was minor, and the prices soon recovered around 17th March when HDFC Defence Fund, a sectoral fund following the defense sector, increased its stakes in ten stocks, HAL being one of the ten. The fund increased its stakes by 1.02 lakh shares, bringing the total holdings in the company to 23.58 lakh shares. 

Possible Reasons For The Price Rise:

Shift in Investor Sentiment For HAL:

On 18th March, HAL recorded a trading volume of 20,24,740, up by approx 79.17% from 11,30,061 on the previous day. This surge aligns with a shift in sentiment from bearish to neutral from 13th to 18th March when the price reached Rs.3,579.85. The increasing volume suggests growing investor confidence, reinforcing the stock’s upward momentum. The improving sentiment is one of the contributing factors to HAL’s price rise.

Q3 Financial Performance:

HAL reported a 14.15% y-o-y rise in consolidated net profit, reaching Rs.1,439.83 crore for the quarter December 2024 quarter. Revenue from operations also grew 15%, rising from Rs.6,061.28 crore in Q3FY24 to Rs.6,957.31 crore in Q3FY25. Plus, the company declared its first interim dividend of FY25 at Rs.25 per share. The revenue growth in the quarter can be attributed to strong defense sector ordering activity and continued execution of HAL’s manufacturing order book, alongside steady demand for replacements and spares. Source: Money Control

Sectoral Developments:

As of 13th March, Foreign Institutional Investors (FIIs) increased their stakes in key defense stocks, reflecting growing confidence in the sector’s long-term potential. This trend aligns with government initiatives, rising defense budgets, and a strong focus on domestic manufacturing. The increased FII participation underscores the sector’s attractiveness and, hence, can contribute to the growing stock price of defense stocks like HAL.

What Does This Mean for Investors?

The recent surge in HAL’s share price coincides with increased trading volume, improved financial performance, and increased institutional interest in the defense sector. The company’s growth in revenue and profitability, coupled with expanding order books and new collaborations, highlights its active role in the aerospace and defense industry. Additionally, the broader sectoral trends, including higher foreign institutional investment and government-backed initiatives, indicate sustained interest in the defense market.

While these factors provide context to HAL’s recent price movement, market conditions, and stock performance can be influenced by multiple variables. This is why thorough research and analysis are essential before making investment decisions.

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