In a market where defence stocks have largely remained in favour despite severe geopolitical strain, Hindustan Aeronautics Limited (HAL) has been a bit of an outlier. The stock is down around 11% so far in 2026, while the Nifty India Defence Index is up about 4%.
HAL recently posted provisional FY26 revenue of ₹32,250 crore, only slightly higher than the ₹30,981 crore it reported in the previous fiscal year, because of delivery challenges in Light Combat Aircraft (LCA) Tejas Mk1A and Hindustan Turbo Trainer-40 (HTT-40) due to supply-chain disruptions stemming from geopolitical and technical issues.
This quickly shifted the focus to execution worries, with some analysts even trimming their estimates after delays in engine supplies from General Electric (GE). This issue, market experts said, is emerging as a key overhang on near-term growth visibility. The provisional FY26 revenue was about 7% below Nomura’s estimate of ₹34,580 crore.
“The miss on our estimates was largely because no LCA Mk1A aircraft were delivered in FY26 due to supply chain issues, falling short of our expectation of five deliveries,” Nomura said in a report dated 2 April. Given the ongoing supply -chain issues, the brokerage has cut its FY27 forecast for LCA deliveries from 14 aircraft to 10, while leaving its FY28 estimates unchanged. Factoring in the provisional numbers and supply-chain disruptions, Nomura cut its earnings-per-share estimates for HAL by 7% for FY26, 5% for FY27, and 1% for FY28.
“Delay in supply of engines by GE has acted as a major bottleneck for HAL’s timely delivery of LCA aircraft,” the brokerage said in the report. As of March 2026, HAL had received just 5 engines from GE, against a commitment of 10, the report added.
According to reports, GE Aerospace delivered the sixth F404-IN20 engine to Hindustan Aeronautics Limited for the Tejas LCA Mk 1A on 2 April. HAL has reportedly levied liquidated damages on GE for delays in supplying the engines.
The engine makes up about 18-20% of the LCA aircraft’s cost, leaving HAL heavily reliant on GE, the sole global supplier of these engines, said Santosh Yellapu, research analyst at Anand Rathi Institutional Equities. He said he sees the current engine supply delay as a temporary hiccup, but warned that any fresh tariff moves under the US President Donald Trump could disrupt GE’s vendor ecosystem, creating more hurdles for HAL. “Margins aren’t under meaningful pressure yet, but revenues have already taken a knock,” he said.
Yellapu estimated HAL’s sales could dip around 4% year-on-year in Q4, though the impact has been partly cushioned by higher volumes in other projects. HAL said in its provisional FY26 update that its order book was around ₹2.54 trillion as of 31 March, up from ₹1.89 trillion at the start of the year (after adjusting for execution).
The jump was driven mainly by large orders from the defence ministry, including 97 LCA Mk1A aircraft worth ₹62,370 crore, six ALH helicopters worth ₹2,704 crore, and eight Dornier aircraft worth ₹2,186 crore, the government-owned company said in the update.
“The outstanding manufacturing orders for helicopters, aircraft, and engines provide long-term revenue visibility over the next 7-8 years,” HAL said, adding that its repair and overhaul, spares and other segments also remained healthy and were expected to stay robust going ahead.
Yellapu of Anand Rathi Institutional Equities said the current dip could be a good accumulation opportunity for investors looking at a three to four year horizon as valuations appeared attractive. “A fresh wave of orders, like maybe for the Sukhoi Su-57, could act as a trigger for the stock’s re-rating,” he added.
Nomura said in its report that the risk-reward equation appears favourable as HAL’s stock is trading at 18.5 times estimated FY28 earnings, compared to the five-year average one-year forward P/E of 26 times.
“We’re probably in the last leg of the downcycle. For investors with a two to three year view, a 40-50% upside looks quite likely,” said Amit Anwani, vice president, research, at PL Capital. “We seem close to an inflection point, and the trajectory should start improving over the next few months as orders begin to materialise,” he said. Anwani added, however, that he expects supply-side issues to persist for another three to four months. Until the first batch of deliveries comes through, investors should keep a close eye on execution timelines, he said.
He also noted that based on HAL’s one-year forward PE, it is trading at a discount to most peers, which offers comfort. That said, the lack of meaningful updates from management is making investors wary. As a result, the stock could remain range-bound for the next couple of months, with chances of a rerating and momentum picking up only once the first batch of engine deliveries comes through, he said.
Sentiment remains firmly positive on HAL, with 20 brokerage firms maintaining a ‘buy’ rating, one suggesting investors hold, and only three recommending they sell, according to Bloomberg data.
Despite the positive outlook, market experts warn that persistent engine supply bottlenecks remain the primary threat to HAL's execution. With several airframes awaiting components, any further delays could derail revised production targets. Consequently, investors should closely track aircraft delivery schedules as the main catalyst for future stock performance.
Dipti has spent nearly a decade happily knee-deep in the fast-moving, occasionally nerve-wracking, and always fascinating world of stock markets, tracking everything from sharp sell-offs to surprise rallies, and the narratives that drive them. She began her journalism journey at Informist, sharpened her market instincts at CNBC Digital and Moneycontrol, and is now charting new territory with Mint. Here, she is exploring new ground, bringing together sharp analysis, on-ground insights, and a keen eye for what really moves markets.<br><br>Before stepping into journalism, Dipti studied law and worked with a solicitor firm for close to three years, an experience that gave her a strong foundation in analytical thinking, contracts, and corporate structures. But the pull of markets and storytelling proved stronger, prompting a switch from law to journalism.<br><br>She writes about stocks and investments, but that’s only part of the story. Dipti also teams up with market experts to turn complex trends into sharp, easy-to-understand videos, occasionally peeks at deals and acquisitions, and regularly picks the brains of industry leaders. Somewhere between earnings calls, market swings, and boardroom chatter, she’s always looking for the next story that explains what’s really moving the markets.