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    Hind.Aeronautics

    HALGood
    Capital Goods·17 May 2023
    Management Summary

    HAL posted a strong FY23 with record revenue of Rs 26,900 crores and PBT growth of 24%, exceeding its own guidance. The year was marked by ROH-driven revenue (manufacturing subdued) and significant non-operating income from tax refunds and interest. Management provided a clear growth trajectory: 9% in FY23-24, double-digit from FY25, stabilizing at 14-15%. The Rs 48,000 crore manufacturing order pipeline and Rs 82,000 crore order book provide strong visibility.

    Highlights

    8

    • Record revenue of Rs 26,900 crores, up 9.37% YoY vs Rs 24,600 crores; exceeded 8% guidance

    • PBT grew 24% to ~Rs 6,500 crores from Rs 5,231 crores; PAT grew 14% (10% operating PAT growth)

    • EBITDA margin at 31% vs 25-26% historical; driven by ROH mix and Rs 600 crore HTT-40 amortization

    • Order book maintained at ~Rs 82,000 crores; Rs 26,000 crores liquidated and Rs 26,000 crores accreted

    • Interest income Rs 900+ crores from surplus cash; additional Rs 560 crores IT refund interest

    • Income tax dispute settled: Rs 2,451 crores refund + Rs 830 crores interest over 2 years (FY08-FY16)

    • Rs 48,000 crores manufacturing orders expected in FY24 including AL-31FP Rs 26,000 crores

    • Double-digit revenue growth guided from FY25; 12-13% then stabilizing at 14-15%

    What Changed2

    vs Q4 FY24

    Tone shiftStrong → GoodGuidance items11 → 9 (-2)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹26,900 Cr+9.4%YoY
    2. 02PBT₹6,500 Cr+24%YoY
    3. 03PAT Growth14%+14.0%YoY
    4. 04EBITDA Margin31%
    5. 05Order Book₹82,000 Cr

    Guidance & targets

    9
    CategoryTargetPriority
    Revenue
    Revenue Growth Trajectory
    Double-digit from FY25, 12-13% then 14-15%
    		High
    Margins
    EBITDA Margin
    26-27%
    		High
    Margins
    Operating Profit Margin
    17-19%
    		High
    Order Book
    Manufacturing Order Inflow
    Rs 48,000 crores
    		High
    ROH
    ROH Growth
    5-6%
    		High
    Deliveries
    LCA Mark 1A Delivery Schedule
    3 in FY24, then 16/year peak
    		High
    Deliveries
    HTT-40 Delivery Schedule
    Starting Sep 2025, peak 20/year
    		High
    Order Pipeline
    AON Approved Orders
    Rs 36,000 crores
    		High
    Order Pipeline
    AON Pending Pipeline
    Rs 65,000 crores
    		Medium

    Risks & concerns

    7
    RiskSeverity

    Manufacturing revenue still subdued; dependent on new orders materializing

    Only 7 ALH, 2 LCA, 8 LCH, 2 Dornier delivered in FY23. Manufacturing pickup dependent on LCA Mark 1A and new contracts — Both acknowledged

    medium

    EBITDA margin of 31% unsustainable

    Elevated by HTT-40 amortization (Rs 600 crores), higher ROH mix. Will normalize to 26-27% — Management acknowledged

    low

    ALH fleet partially grounded after 3 accidents

    Army grounded ALH; Air Force still flying. Cost of control rod replacement Rs 150-200 crores. Management says no design issue — Both downplayed

    medium

    Export breakthrough still pending

    Active leads with Philippines, Argentina but no confirmed order. Expected within 1 year — Both acknowledged

    medium

    Russian supply chain concerns persist

    Some delays but supplies getting normalized. Payments sorted through rupee route. Fleet serviceability maintained — Analyst downplayed

    medium

    Areas of Evasion(2)

    • Development order specifics
    • Exact manufacturing vs ROH margin split

    Q&A highlights

    5

    “working on a very tight schedule...even if there are going to be some sort of delays, it may not be very significant”

    Acknowledges tight schedule but confident on delivery; third line being set up in Nashik

    asked by Amit Dixit (ICICI Securities)

    1 min read5 chapters

    Detailed Narrative

    01

    Record Revenue Despite Manufacturing Lull

    HAL achieved record revenue of Rs 26,900 crores (+9.37% YoY) driven by ROH/spares despite limited manufacturing deliveries (25 platforms total). ROH contributed ~Rs 18,800 crores. PBT surged 24% to Rs 6,500 crores aided by Rs 900 crores interest income and Rs 560 crores IT refund interest.

    02

    Rs 48,000 Crore Manufacturing Pipeline for FY24

    Expected orders: AL-31FP 240 engines (Rs 26,000 crores), RD-33 80 engines (Rs 4,500 crores), 25 ALH Dhruv (Rs 3,500 crores), 12 LUH (Rs 2,500 crores), 12 additional Su-30 (Rs 12,000 crores). All in advanced negotiation stages.

    03

    Multi-Year Growth Trajectory Articulated

    Management laid out clear growth path: FY23 achieved 9.37% (exceeded 8% guidance), FY24 guided ~9%, FY25 double-digit (10-11%), then 12-13%, stabilizing at 14-15%. Last 4-year CAGR was 7.7%. Manufacturing pickup from FY25 with LCA Mark 1A deliveries is the key catalyst.

    04

    Income Tax Settlement and Cash Position

    Long-pending IT disputes from FY08 to FY16 settled with Rs 2,451 crores refund and Rs 830 crores interest over 2 years. No further pending disputes. Cash balance healthy for working capital and proactive procurement.

    05

    Order Pipeline Visibility of Rs 1 Lakh Crores+

    Beyond Rs 48,000 crores near-term orders: AON approved Rs 36,000 crores (Coast Guard ALH 9, UHM 60, UHM PBL Rs 13,000 crores). AON pending Rs 65,000 crores (LCH 145, LUH 175, HTT-40 36, Dornier upgrades). Total pipeline exceeds Rs 1 lakh crores over 2-5 years.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.