Hindustan Aeronautics (HAL) shares jumped over 3 percent on March 26 after GE Aerospace announced that it has delivered the first of 99 F404-IN20 engines for the Tejas Light Combat Aircraft Mk 1A fighter jet. HAL shares were trading at Rs 4,152 per share at noon.
Speaking about the latest development, GE Aerospace said, “This is an important milestone in our 40-year relationship with HAL and our efforts to ensure a strong future for India’s military by developing next-generation fighter aircraft while enhancing the country’s defence manufacturing capabilities.
GE Aerospace has a strong history of military jet propulsion collaborations in India.” US-headquartered GE Aerospace said that after collaborating with the Aeronautical Development Agency in the 1980s, its F404-IN20 engine was selected for the single-engine Tejas in 2004.
“This was a significant breakthrough for both India and GE Aerospace,” the company said. As per the Rs 5,375 crore deal inked between the two companies in 2021, the supply of the engines was to begin by 2023. “This is the largest deal and purchase order ever placed by HAL for the LCA,” then HAL CMD R Madhavan had said.
“The F404 engine family has proven itself in operations worldwide and we have committed to deliver all 99 engines and support services by 2029,” GE Aviation’s vice president of business development and sales Chris Cyr said.
However, significant delays in the supply of engines further slowed down HAL’s supply of the jet to the Indian Air Force. HAL shares have rallied significantly in recent times, gaining nearly 29 percent in the last one month.
Morgan Stanley has given an ‘highweight’ rating to the stock, with a target price of Rs 5,292. The target price represents an upside of nearly 32 per cent from the previous session’s closing price.
The international brokerage remains bullish on HAL’s defence exposure and expects the stock to witness a cyclical recovery.
