Hindustan Aeronautics Ltd. share price target

We attended Hindustan Aeronautics’ (HAL) Q2FY23 earnings call. Key highlights: 1) RoH and spares proportion to stay elevated till FY24E; 2) EBITDA margin is likely to stay at 26-27% owing to higher RoH revenue and cost efficiencies.

Hindustan Aeronautics (HAL) reported strong performance in Q2FY23. Key highlights: 1) EBITDA margin at 31% was ahead of the 25-26% guidance for FY23- FY25.

Hindustan Aeronautics (HAL) highlighted visibility on orders worth ~Rs1,500bn over next three years, with Rs450bn of manufacturing orders expected in FY23- H1FY24.

Hindustan Aeronautics’ (HAL) Q1FY23 result was better than expected with revenue growth of 124.2% YoY and PBT increasing 203.8% YoY.

Hindustan Aeronautics’ (HAL) management has maintained 6% revenue growth guidance for FY23. While FY24 growth guidance is revised down to single digits, a strong EBITDA margin outlook at 25-26%, on the back of 55-60% Repair overhaul and spares (ROH) execution in the medium term leads to earnings upgrades.