Hindustan Aeronautics Ltd is recasting itself as the sharp edge of India’s aerospace ambition, moving beyond its legacy as a government assembler. The stock has tripled in two years, backed by a ₹1.84 trillion order book and major contracts for Prachand helicopters and Tejas fighters.

HAL is transitioning from assembling imported kits to developing indigenous platforms and engines, as seen with the Tejas Mk1A, LCH Prachand, and engine co-development with GE. Talks with Safran and Rolls-Royce for a next-generation engine for the Advanced Medium Combat Aircraft stealth fighter further cement the ambition.

The numbers support the story. HAL’s 2024-2025 revenue rose modestly to ₹309.8 billion despite supply disruptions. Net profit grew by 10% to ₹83.6 billion, reflecting cost discipline. New contracts worth over ₹1 trillion and ₹175 billion in maintenance orders bulked up HAL’s future pipeline to a hefty ₹6 trillion. The company is now putting nearly 10% of its revenue into R&D and has filed more than 1,000 patents.

Over 90% of HAL’s revenue still comes from the government, making cash flows dependent on policy and contract milestones. But a bulging order book is not the same as full coffers.

More critically, HAL remains a systems integrator with patchy control over the chain it wants to dominate. Engines are sourced, radars imported, and domestic vendors – Larsen & Toubro, VEM Technologies, Bharat Electronics—are still climbing the aerospace maturity curve. In effect, HAL is trying to conduct an orchestra but many of its musicians are still tuning their instruments. 

Global Credibility
India’s defence exports reached a record ₹236.2 billion in 2024-2025, a 12% jump over the previous year. But HAL’s direct contribution was ₹8.4 billion—barely 1% of its own revenue. 

Trainer jets to Guyana and spares to Argentina might make for good press releases, but they don’t yet constitute a global franchise. In the arms bazaar, cost is a consideration, but credibility is currency. And that currency is earned through timely delivery, reliable maintenance, and after-sales support.

Even where HAL is pushing frontiers with the AMCA stealth fighter or the Twin Engine Deck Based Fighter for carrier-based operations, its ambitions are far ahead of market realisation. The AMCA may enter production only by 2028-2029, the TEDBF sometime in the next decade. These are long-cycle, high-risk, policy-sensitive bets.

There’s also the broader ecosystem to consider. HAL is expanding its MRO footprint, including a Nashik-based facility in partnership with Airbus. It’s aiming for a slice of India’s $4 billion domestic maintenance market and projects a 29% CAGR in manufacturing revenue through 2026-2027, with EBITDA margins over 25%. 

But those rosy numbers rest on brittle assumptions like seamless supply chains, punctual ramp-ups in Bengaluru and Nashik, no geopolitical snags. 

While institutional investors have maintained a steady presence in HAL, holding approximately 20.38% of the company over the past five quarters, there's been a notable rise in retail participation. Retail shareholding has risen from 5.8% in June 2023 to 7.98% by March 2025, indicating growing interest from individual investors.

The stock has delivered about 20% returns in one month, and 53% in three months. The stock trades at 32 times 2025-2026 earnings, pricing in not just delivery, but dominance. That’s less valuation and more faith.

For HAL to justify its current valuation, it must move from backlog to bankability, from policy reliance to operational autonomy, and from aspirational R&D to actionable innovation.

India’s ambition to become a net defence exporter rests heavily on HAL’s shoulders. The government wants exports to hit ₹500 billion by 2028-2029. HAL will be central to that target. HAL’s flight plan is ambitious, its intent sincere. But markets reward execution. The skies may be open, but altitude without accuracy is just drift.