HAL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.4

📊 Core Financials:

- Quarterly PAT at ₹1,663 Cr vs ₹1,377 Cr previously → strong growth.

- Excellent profitability with ROCE at 33.9% and ROE at 26.0%.

- Debt-to-equity ratio at 0.00 → debt-free balance sheet.

- Cash flows remain robust, supported by consistent earnings and dividend yield of 0.94%.

💹 Valuation Indicators:

- Current P/E: 34.1 vs Industry P/E: 57.9 → relatively undervalued compared to peers.

- P/B ratio: ~7.8 (₹4,305 / ₹553) → premium valuation.

- PEG ratio: 1.92 → moderate, suggests fair valuation relative to growth.

- Intrinsic value appears close to CMP, offering balanced entry opportunity.

🏢 Business Model & Competitive Advantage:

- HAL is India’s leading aerospace and defense company, manufacturing aircraft, helicopters, and defense systems.

- Competitive advantage lies in government contracts, technological expertise, and strategic importance in defense sector.

- Market cap of ₹2,87,891 Cr reflects scale and dominance in aerospace and defense.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹4,305 is below DMA 50 (₹4,538) and DMA 200 (₹4,529), showing short-term weakness.

- RSI at 34.0 and MACD negative → oversold zone, potential accumulation opportunity.

- Suggested entry zone: ₹4,100–₹4,300.

- Long-term holding recommended due to strong fundamentals, debt-free status, and strategic defense positioning.

Positive

• Strong ROCE (33.9%) and ROE (26%).
• Debt-free balance sheet.
• Quarterly PAT growth of 11.9%.
• Undervalued compared to industry P/E (34.1 vs 57.9).

Limitation

• P/B ratio ~7.8 indicates premium valuation.
• Dividend yield at 0.94% is modest.
• Stock showing short-term weakness below DMA levels.

Company Negative News

• DII holdings reduced by -0.03%.
• Technical indicators (RSI, MACD) show short-term weakness.

Company Positive News

• FII holdings increased by 0.10%.
• Quarterly PAT improved from ₹1,377 Cr to ₹1,663 Cr.

Industry

• Aerospace and defense industry is growing with strong government support and rising defense budgets.
• Industry P/E at 57.9 indicates sector is richly valued compared to HAL’s 34.1.

Conclusion

⚖️ HAL is financially strong with excellent return ratios, debt-free balance sheet, and consistent profit growth. Valuations are attractive compared to industry peers, making it a solid long-term investment. Entry is favorable around ₹4,100–₹4,300, with potential for sustained growth driven by defense sector demand and government contracts.