Global brokerage Jefferies has reiterated its 'Buy' rating on Hindustan Aeronautics Ltd (HAL), projecting a significant 43% potential upside for the defense public sector undertaking. With a target price of Rs 6,800, Jefferies anticipates that the impending delivery of the Tejas Mk1A light combat aircraft will serve as a crucial re-rating trigger for the stock.
Tejas Mk1A Deliveries: A Key Catalyst
The Tejas Mk1A program constitutes a substantial 43% of HAL's current order book, making its successful execution paramount for the company's financial outlook. According to media reports, HAL CMD Ravi Kota expressed confidence in commencing deliveries of the Tejas Mk1A aircraft within the current year.
Jefferies highlighted Kota's deep involvement with India's Light Combat Aircraft (LCA) program, noting his reputation as the “LCA man” within defense circles. Elevated to CMD in May 2026 after serving as Director of Operations, Kota has a 30-year tenure at HAL, including a previous role as Executive Director & General Manager of the LCA Tejas Division.
He is credited with securing the substantial Rs 1.1 lakh crore order for 180 Tejas Mk1A aircraft from the Indian Air Force. Furthermore, Kota has been instrumental in expanding HAL's Tejas Mk1A production capacity in Nashik, increasing indigenous content, and fostering private-sector involvement in major fuselage assembly production.
Valuation and Market Confidence
Jefferies' target price of Rs 6,800 values HAL at 35 times its estimated September 2028 earnings per share. This valuation is notably 33% below HAL's peak multiple and represents a 13% discount compared to Jefferies' target multiple for Bharat Electronics Ltd (BEL), suggesting room for growth.
The brokerage noted that 90-95% of the radar and missile integration and certification processes for the Tejas Mk1A have been completed. CMD Kota indicated in interviews that testing is ongoing to ensure all requirements are met before deliveries begin.
Even a Single Aircraft Delivery Holds Significance
Despite previous delays in the Tejas Mk1A program since 2024, which have raised investor concerns regarding HAL's execution capabilities, Jefferies believes a turning point is near. The report states that 24 airframes are already prepared with GE engines installed and tested. This readiness underpins confidence in delivering 10 aircraft this year, surpassing Jefferies' initial assumption of five.
Jefferies emphasized, "We believe that Indian Air Force accepting delivery of even one aircraft will give confidence on the company’s abilities and be a key upside driver." This initial acceptance is seen as crucial for restoring investor trust and driving the stock's re-rating.
HAL's robust order book, valued at Rs 2.55 lakh crore, stands at 7.7 times its FY26 revenues. An additional pipeline of Rs 1.8 lakh crore provides strong revenue visibility through FY27-30 and beyond, reinforcing the long-term positive outlook for the defense giant.