Shares of Hindustan Aeronautics Ltd. (HAL) rose by 1.9% to trade at Rs 4,519.95 on October 14 after the state-owned defense company was upgraded to ‘Maharatna’ status by the Department of Public Enterprises. HAL becomes the 14th public sector undertaking (PSU) to receive this prestigious status, which grants greater operational autonomy and financial power.
With this development, the list of ‘Maharatna’ PSUs now includes prominent companies such as BHEL, BPCL, Coal India, GAIL, HPCL, Indian Oil, NTPC, ONGC, Power Grid, SAIL, Oil India, REC, and PFC. The last company to achieve ‘Maharatna’ status was Oil India in August of the previous year.
In order to be categorized as a ‘Maharatna’ company, the financial eligibility criteria were very strict. For instance, an average turnover in excess of Rs 25,000 crore, net worth over Rs 15,000 crore and net profit over Rs 5,000 crore during the last three years were considered. The companies under this category can spend without monetary limits on capital expenditure and enjoy high degrees of autonomy in decision-making.
Delighted with the growth prospects of HAL, Jefferies and Elara Securities brokerage firms have voiced their optimism. Jefferies has issued a ‘buy’ rating on the stock, all because of the indigenization drive of HAL and exports of defence products. According to the firm, HAL will drive continuous double-digit growth over the next 3-5 years due to high entry barriers and near-monopoly status in the industry.
Elara Securities-which also had a ‘buy’ rating on HAL-estimated the target price at Rs 5,590, citing the increasing share of indigenized products and untapped export opportunities in both aircraft and helicopters.
HAL’s stock has moved upwards and become one of the star performers in the market, rallying nearly 57% in 2024 and surging 126% in the past 12 months against the benchmark Nifty index which has risen 27% in the same period.
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Source: Moneycontrol
News Desk
