Target: ₹5,000
CMP: ₹3.512.80
Revenue for Q3-FY25 came at ₹6,960 crore (vs consensus estimates of ₹7,010 crore), up 14.8 per cent y-o-y and up 16.4 per cent q-o-q. EBIDTA for Q3-FY25 came at ₹1,680 crore (vs consensus estimates ₹1,710 crore), up 17.2 per cent y-o-y and up 2.6 per cent q-o-q. The EBITDA Margin came at 24.2 per cent, improved 50 bps y-o-y and contracted 326 bps q-o-q (vs CEBPL estimates of 24.4 per cent).
PAT for Q3-FY25 came ₹1,440 crore (vs consensus estimates of ₹1,320 crore), up 14.1 per cent y-o-y and down 4.7 per cent. PAT Margin decreased by 12 bps y-o-y and 458 bps q-o-q, reaching 20.7 per cent (vs choice’s estimates of 18.8 per cent).
We project HAL Revenue, EBITDA, and PAT to grow at a CAGR of 13 per cent, 12 per cent and 11.3 per cent, respectively, over FY24-27E. As a result, we have revised our earnings estimates for FY26E and FY27E, lowering EPS projections by 2.8 per cent and 2.2 per cent, respectively due to delays in F404-IN20 standard engine.
Based on these adjustments, we maintain our “Buy” recommendation and revise our target price to ₹5,000, implying a valuation of 32x FY27E EPS (Earlier 35x). We will closely monitor execution progress, and any improvement in the GE F404-IN20 variant engine delivery timeline could lead to a reassessment of our target price and valuation multiples.