Hindustan Aeronautics Ltd’s stock slipped by about 7% intraday on Monday on the NSE after the tragic crash of a light combat aircraft Tejas Mk 1 at the Dubai air show on Friday. The state-owned enterprise has to deliver 180 Tejas aircraft worth about ₹1.1 trillion, which is over 40% of HAL’s estimated order book of ₹2.7 trillion at the end of the September quarter (Q2FY26).
While the crash could impact investor sentiment negatively in the near future, the delivery schedule of the fighter aircraft is expected to remain unaffected.
“We do not think Tejas Mk 1 aircraft will be grounded as the incident did not occur in mission mode and instead took place at an air show (unlike the grounding of HAL’s advanced light helicopter due to frequent crashes in missions),” analysts at Elara Capital said in a 23 November report. Yet, the crash may delay exports, the analysts said.
HAL’s Tejas contract, signed in February 2021, had been held up due to a delay in the supply of F-404 engines from General Electric Co. With engine supply having started in April, HAL plans to deliver up to six aircraft in FY26 and accelerate deliveries further from FY27.
It commissioned the third assembly line for Tejas at Nashik last month, increasing its annual production capacity to 24 aircraft. Still, it may take about eight years for HAL to complete the order.
The company has gained significant traction with the government’s focus on defence fleet modernization and augmentation. Against the required strength of 42 squadrons of active fighter aircraft, India has an active fleet of 29, down from 31 in September, following the de-rostering of MiG-21.
Civilian aircraft
A JPMorgan India report dated 13 November estimated an annual order inflow of ₹65,000 crore for HAL during FY26-28 with a total market opportunity of over ₹2.5 trillion. Besides defence, HAL has entered into various collaborations for civilian aircraft manufacturing, civil repair and overhaul, including an MoU signed last month with Russia’s PSJC-UAC for the production of the SJ-100, a narrow-bodied civilian aircraft.
Yet, HAL faces a bigger challenge of improving its execution amid supply chain woes and other operational issues, with its order backlog swelling to over eight times the revenue of the trailing 12 months, up from three times at the end of FY24. Despite receiving the first engine for Tejas in April, delivery of the aircraft is still awaited.
Its light utility helicopter deliveries are stuck due to software integration issues. Media reports pointed out the government is mulling the restructuring of HAL and has hired a consultant for this. Carving out separate units for helicopters and fighter jets could help improve efficiency.
There was some momentum in HAL’s execution in H1FY26 given year-on-year revenue growth of 11% to ₹11,500 crore, compared with the management’s guidance of 8-10% for FY26, and the 2% growth in FY25. However, higher cost of raw materials meant H1FY26 Ebitda grew at a slower pace of 8% year-on-year to ₹2,800 crore.
HAL’s shares are up about 7% so far in 2025 and trade at almost 33 times FY26 earnings, as per Bloomberg consensus estimates. Meeting the Tejas delivery schedule would be key for the stock movement. Also, investors will track the findings of the court of inquiry into the crash for pointers to any equipment malfunctioning.
