Shares of Hindustan Aeronautics Ltd extended their decline on Thursday, falling over 6 per cent to ₹3,952 from the previous close of ₹4,217.10, as concerns over execution risks and rising competition overshadowed company clarifications on key defense programmes. At 11.48 am, the stock was trading around 4 per cent lower at ₹4,028.
The weakness came after Morgan Stanley downgraded the stock to underweight, flagging growing downside risks despite HAL’s recent outperformance against the broader market. The brokerage noted that the defense major had beaten the Nifty by about 4 per cent year-to-date, while consensus valuation multiples had already contracted sharply over the past year. It warned that intensifying private sector competition and the possibility of slower execution, driven partly by high import dependence at a time when several countries are ramping up defense spending, could pressure the stock.
Morgan Stanley cut its earnings estimates for FY27 and FY28 by 2 per cent and 5 per cent, respectively, placing them below market expectations, and sharply reduced its weighted target price to ₹3,355 from ₹5,092. The brokerage also tweaked its valuation assumptions, including raising the cost of equity, lowering long-term income growth expectations to factor in execution risks, and trimming its terminal return on equity. At the revised target, HAL would trade at about 22 times FY28 earnings, prompting the downgrade from equal weight to underweight.
On Wednesday, HAL issued a clarifications on operational developments. It said it had not received any official communication from the DRDO regarding reports linked to the Advanced Medium Combat Aircraft program and, therefore, could not comment on them.
In its latest stock exchange disclosure on deliveries of the LCA Mk1A fighter jets, the defense PSU said five aircraft were ready for delivery, while nine more were awaiting engines from GE. It added that five engines had already been received and that the overall supply position was improving. HAL reiterated that it remained confident of meeting its guidance for the current financial year, noting that design and development issues identified were being addressed in an expedited manner and that it was in active discussion with the Indian Air Force to ensure aircraft are delivered at the earliest.
Published on February 5, 2026