HAL: Flying high

Shares of Hindustan Aeronautics (HAL) rallied as much as 5.8% and hit fresh 52-week high of Rs 1,078 on the BSE on Wednesday after the Ministry of Defence (MoD) on Tuesday approved the acquisition of ‘Make in India’ equipment worth Rs 8,722 crore.
Of this, bulk will go towards purchasing the first fixed wing aircraft that HAL has designed and developed in decades.
The Defence Acquisition Council (DAC), in its meeting held [with] Defence Minister Rajnath Singh, accorded approval for capital acquisitions of various platforms and equipment required by the Indian Armed Forces.

During this meeting a proposal for an approximate cost of Rs 8,722.38 crore were approved. With prototypes and certification process underway, the DAC approved procurement of 106 basic trainer aircraft (BTA) from HAL to address the basic training requirements of the IAF. Post certification, 70 BTA will be initially procured from HAL and balance 36 after operationalisation of HTT-40 fleet in IAF.

HTT-40’s cost has been fixed at approximately Rs 50 crore, which means the acquisition cost of the entire fleet will come to about Rs 5,300 crore. The IAF was pushing for the acquisition of 38 more Pilatus PC-7 Mark II basic trainers from Switzerland, to supplement its existing fleet of 75 aircraft. However, HAL’s rapid success in developing the HTT-40 has ensured that the additional BTAs will all be Indian.
HTT-40 is in the final stages of spin trials, the make-or-break capability demonstration for a basic trainer. Production planning for building the trainer is already underway.

On August 9, MoD had announced a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative.
The embargo list is expected to enable estimated Rs 4 lakh crore worth of contracts, that would be placed to the domestic industry over the next five to seven years. This comes to average contract of Rs 57,000 crore to Rs 80,000 crore per annum. This would provide significant thrust to defence manufacturing companies in scaling up their production capabilities in long term.

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.