Hindustan Aeronautics Ltd. shares tanked 5% on Thursday, extending its decline to a second session after reports said the defence ministry shortlisted private players over the PSU giant for an advanced fighter jet program. The stock lost 5.7% in value in the previous session when the news came.

HAL lost out to Tata Advanced Systems Ltd., Larsen & Toubro Ltd., and Bharat Forge Ltd. to develop and manufacture India’s next-generation fighter aircraft under the prestigious Advanced Multirole Combat Aircraft (AMCA) programme. The final selection is expected within the next three months, according to a report in The Economic Times.

The defence ministry has evaluated technical bids from seven Indian firms and has shortlisted TASL, L&T, and Bharat Forge. HAL, which manufactures most of India’s military aircraft, has not made the cut. The final selection is expected to take place after the shortlisted companies submit detailed commercial proposals for manufacturing prototypes of the next generation jets, ET reported.

In a stock exchange filing on Wednesday, HAL clarified it has not received any official communication in this regard and will, therefore, not comment on the reports. 

The AMCA is a key programme for India’s indigenous defence manufacturing and primarily involves collaboration between the DRDO as the primary research and development agency and HAL as a manufacturing partner. 

HAL share price was trading 4% lower at Rs 4,403 apiece on the NSE as of 9:25 a.m. The relative strength index was at 35, close to a level that indicates ‘oversold’ zone. The stock has risen 6% in the last 12 months.

Outlook

Analysts at Morgan Stanley slashed their target price for HAL stock to Rs 3,355 from Rs 5,092 and downgraded rating to ‘Underweight’ from ‘Equal-weight’. They see downside risk to the stock given increased private sector competition while slower execution persists due to high import dependance as multiple countries look to increase defence spend.

JPMorgan, while not tweaking its rating or target price, said the loss of the AMCA loss is negative for HAL but was largely expected. The company’s already large order book is seven times its current revenue and it has “ample opportunity” to secure more deals. 

Twenty-one out of the 25 analysts tracking HAL have a ‘buy’ rating on the stock, two recommend a ‘hold’ and two suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets is Rs 5,627, which implies a potential upside of 37%.

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New Delhi:

Shares of state-owned Hindustan Aeronautics Ltd (HAL) hit fresh lifetime highs as the stock turned ex-dividend on Thursday.

An ex-dividend date is the day on which a stock starts trading without the benefit of the next scheduled dividend payment.

The HAL stock gained as much as 2.7 per cent in trade on Thursday to hit a new all-time high of Rs 4,138.80 per share in the morning session on BSE. However, it soon erased all its gains to trade in the negative at Rs 3,989, down 1 per cent, by 11:25 AM.

A spurt in trading volume was also seen, with the number of shares changing hands on BSE jumping 1.2 times the daily average during the morning session itself.

To recall, the board of directors of the company had declared a final dividend of Rs 15 per equity share of Rs 10 each fully paid up (150 per cent) for the financial year 2022-23.

The record date for the payment of the final dividend, if approved by the shareholders in the company’s annual general meeting (AGM), was set as August 24, 2023. The dividend shall be paid to the shareholders within 30 days from the date of its approval.

The 60th AGM of the company will be held on August 31, 2023, at 1500 Hours through video conferencing (VC) or other audio-visual means (OAVM).

Earlier in March 2023, HAL had paid an interim dividend of Rs 20 per share to the eligible shareholders for fiscal 2022-23. Before that, in calendar year 2022, the company had paid dividends thrice to its shareholders — Rs 20 per share in November, Rs 10 per share in August and Rs 26 per share in February.

The company had recorded 31 per cent growth in its consolidated net profit at Rs 814 crore for the first quarter ended June 2023 (Q1 FY24) compared with Rs 620 crore in the year-ago period. Revenue from operation