All sectors
Defence
Aircraft & Aeroengines
One integrator, three decades of contracted demand
Heavy capitalMonopoly2 listed names covered
IAF squadron strength (31 vs 42 sanctioned) is the arithmetic behind everything: 97 Tejas Mk1A ordered + 108 more planned, Mk2 in prototype, AMCA sanctioned (₹15K Cr development), plus 156 LCH Prachand. HAL owns final assembly for all of it. The constraint is cadence (engines from GE, structures from partners), not demand.
TAM: HAL order book ₹1.3L Cr; IAF needs 300+ new fighters by 2040 ≈ ₹6-8L Cr lifetime platform value incl. engines/weapons/MRO.
Demand drivers
- ▸Squadron gap: 11 squadrons short, MiG-21 retired 2025 — replacement is not optional
- ▸Two-front doctrine post-2020 Ladakh + Op Sindoor lessons
- ▸AMCA 5th-gen sanction (2024) with 40% private work-share mandated
- ▸Helicopter recap: 156 LCH ordered FY25 (₹62K Cr), LUH to follow
Competitive dynamics
- ▸HAL monopoly on FAL; private (Tata-Airbus C-295) entering transport only
- ▸Engine dependence is the real competition — GE F404/F414 delivery sets HAL's output
- ▸MRO opening to private (Safran LEAP JV, Air Works) erodes HAL's sustainment share long-term
Unit economics
- ▸Tejas Mk1A ≈ ₹550 Cr/unit realisation, ~30% gross margin at current indigenisation (60%+)
- ▸HAL OPM 30-32% — manufacturing + high-margin spares/ROH mix
- ▸Advance-heavy contracts → HAL net cash ₹30K Cr+, ROCE 32% despite PSU cost structure
Key programs
- ▸Tejas Mk1A (97+108) — cadence 16→24/yr
- ▸Tejas Mk2 (F414, 80% ToT deal pending signature)
- ▸AMCA — 2035 IOC target, GE-414 INS interim engine
- ▸LCH Prachand 156 units, LUH, IMRH development
What an expert watches
- ▸Monthly Mk1A deliveries vs 24/yr promise
- ▸F414 ToT signature (slipped twice)
- ▸AMCA engine co-development partner choice (Safran vs GE vs RR)
- ▸Private FAL share in AMCA production phase
Sector scoreboard — real data
| Company | Mkt cap | P/E | OPM | ROCE | Sales 3Y | Fundamental | Tech score | Decision |
|---|---|---|---|---|---|---|---|---|
| Hindustan Aeronautics | ₹3.00 L Cr | 32.9x | 30% | 32.0% | 7.1% | 82 | 74 | Buy |
| Dynamatic Technologies | ₹7.0K Cr | 139.0x | 11% | 10.0% | 7.2% | 34 | 58 | Sell / Avoid |