HAL confirms CCS approval of 97 LCA mk-1A jets; stock recovers

Shares of state-run defence equipment manufacturer Hindustan Aeronautics Ltd. (HAL) opened lower on Thursday, August 21, but later recovered and were trading higher at ₹4,498.80.The company informed exchanges that, as communicated by the Ministry of Defence, the Cabinet Committee on Security (CCS) has approved the procurement of 97 Light Combat Aircraft (LCA) Mk-1A along with associated equipment for the Indian Air Force from HAL.

Earlier, sources told CNBC-TV18 that the CCS had cleared the purchase of 97 LCA Mk-1A fighter jets, valued at around ₹62,000 crore, from the company.

The Light Combat Aircraft Mark1A is an upgraded version of the Tejas fighter jet, which is developed by HAL. It is built to replace the ageing fleet of MiG-21 fighter jets.Global brokerage firm UBS has a ‘Neutral’ rating on HAL, with a price target of ₹4,900 per share.

The brokerage said that this will be the second MK1A order for HAL, after the one it received in February 2021. It expects deliveries for MK1A to commence with 6 of those jets to be delivered in the current financial year, with the F404 engine issue now behind.

Of the 22 analysts covering Hindustan Aeronautics, 17 of them have a ‘Buy’ rating on the stock, three say ‘Hold’, while two have a ‘Sell’ recommendation.

HAL shares are currently trading 0.035% lower at ₹4,466.20. On a year-to-date basis, the stock has risen 7%.