Hindustan Aeronautics Tejas Mk-1A deliveries near as engine supply improves

Investment View and Valuation

Anand Rathi Research’s July 22, 2026 company update on Hindustan Aeronautics (HAL) maintains a BUY rating, supported by improving execution visibility for the Tejas Mk-1A programme and HAL’s long-cycle order book. The broker believes the programme is moving closer to deliveries after more than two years of delays, as weapon integration, software and engine-supply bottlenecks begin to subside.

Anand Rathi’s target price is Rs5,431, based on discounted cash flow valuation.

Tejas Mk-1A Execution and Delivery Outlook

According to Anand Rathi, the original March 2024 Tejas Mk-1A delivery timeline was delayed by a combination of GE F404 engine shortages, radar and electronic-warfare integration challenges, weapon qualification and software validation, rather than by a single air-to-ground missile software issue.

Air-to-air and air-to-ground weapon trials involving Astra and ASRAAM missiles and laser-guided bombs are largely complete, although certain software patches remain pending certification. The broker views the successful twin-ASRAAM firing as evidence of meaningful progress in resolving the software and systems-integration problems between the aircraft’s Israeli-origin radar, electronic-warfare suite and multiple weapon systems.

Engine availability is now the central execution constraint. HAL has received seven GE F404-IN20 engines and expects a batch of 10 additional engines from GE, USA, before November 2026. HAL has manufactured and flight-tested about 20 Tejas Mk-1A aircraft, while another eight to nine are at various stages of fabrication; these aircraft are awaiting engine fitment.

Management aims to deliver the first squadron of 16-18 Tejas Mk-1A aircraft by March 2027. Anand Rathi expects near-term re-rating catalysts to include actual Mk-1A deliveries and sustained discipline in GE engine supplies.

Order Book and Multi-Year Growth Visibility

HAL’s order book stood at Rs2.54 trillion, supported by large FY26 orders including 97 LCA Tejas aircraft, six ALH helicopters and eight Dornier Do-228 aircraft.

Management expects around Rs900 billion of order inflows across FY27 and FY28, including repair and overhaul, or ROH, work. Anand Rathi sees this order pipeline, the HTT-40 production ramp-up, the Su-30 upgrade opportunity and recurring ROH revenue as providing multi-year growth visibility.

Financial Outlook

Management has guided for FY27 revenue growth of 10-12 per cent and EBITDA margin of 30-31 per cent. Anand Rathi’s estimates are as follows:

Key Risks

• Further undue delay in engine supplies.
• Tejas Mk-1A execution slippages.
• Higher working-capital intensity.
• Deferral of large defence contracts.