The Reasons Behind the Nearly 10% Drop in Hindustan Aeronautics Shares Over the Last Two Sessions

18/7/2024,

The number of minor owners in HAL, or those having approved share capital of less than ₹2 lahks, rose by 60% from the end of the March quarter to 10.8 lahks from 6.9 lahks, according to ownership statistics for the June quarter.
The shares of Hindustan Aeronautics Ltd. witnessed a 6% decrease on Thursday, exacerbating the losses from the Tuesday trading session, during which the price fell by over 3%.

A sales note from the brokerage firm InCred raises questions about the value of military stocks and stocks such as HAL.


On the note, July 7th is written.

The brokerage compares Dassault Aviation to HAL and sees it as a global competitor. In contrast to HAL, which reported $3.67 billion in revenue and $921 million in profit during the same period, Dassault reported $5.19 billion in sales and $974 million in profit during the most recent fiscal year.


HAL is currently trading at $41 billion, whereas Dassault Aviation is valued at $6.7 billion.

"Over the next two years, Dassault Aviation revenue/earnings are expected to grow at a Compounded Annual Growth Rate of around 24% and 12%, while that of HAL at around 13% / 8%, respectively," the note of sale noted.

Dassault had a $41 billion order backlog by the end of the 2023 calendar year, compared to HAL's $11 billion.



Among the sixteen analysts who cover Hindustan Aeronautics, one has a "sell" recommendation and one has a "hold" rating. Fourteen of the analysts have a "buy" rating.


The consensus price target indicates that the shares of the defence PSU could increase by 4% after the two-day dip.

Even though HAL's shares haven't reached their lowest point yet, they are down 4.6% at ₹5,085. The shares had an intraday decline to ₹4,975 on Wednesday.



On July 14, it reached a record high of ₹5,675, which it later rectified.

The price at which HAL shares are currently trading is significantly higher than its five-year average price-to-earnings multiple of 23.6 times, with the financial year 2026 price-to-earnings multiple of 38.26 times.

The number of minor owners in HAL, or those with an approved share capital of less than ₹2 lahks, rose by 60% from the March quarter to 10.8 lahks from 6.9 lahks at the end of March, according to shareholding data for the June quarter.