Hindustan Aeronautics Limited — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

FY25 was a year of challenges (GE engine supply issues, ALH fleet grounding) and strategic wins (Rs 1.02 lakh crore new manufacturing orders). Revenue grew only 2% reported but 7.25% adjusted for prior year one-offs. The order book nearly doubled to Rs 1,89,300 crores. New CMD D.K. Sunil provided clear guidance on LCA Mark 2 timeline (first flight 2026, certification 2029, production 2030-31) and helicopter capacity (30 LCH/year). Interest income grew to Rs 2,566 crores reflecting massive cash position.

Highlights

  • Revenue at Rs 30,105 crores (+7% YoY adjusted, +2% reported due to Rs 1,502 crore prior year one-off); PBT Rs 10,820 crores (35% of revenue)

  • Order book surged to Rs 1,89,300 crores from Rs 94,127 crores; Rs 1,02,337 crores new manufacturing orders won

  • Major orders: 156 LCH Prachand (Rs 62,777 crores), 240 AL-31FP engines (Rs 25,500 crores), 12 Sukhoi-30 (Rs 13,454 crores)

  • GE engine supply chain resolved - first engine delivered April 2025; 12 LCA deliveries expected in CY2025

  • Manufacturing only 23% of revenue; ROH/spares 70%; inventory days rose to 263 from 159 due to WIP buildup

  • Maharatna status achieved Oct 2024 - first defence PSU

  • Revenue growth guidance 8-10% for FY26; possible double-digit from FY27

  • Operating EBITDA ~31%; with interest income ~38-39%

Concerns

  • GE engine supply limited to 12 in CY2025 vs 16/year contractual rate

  • ALH fleet partially grounded - Navy/Coast Guard variant

Key financials

  1. Revenue ₹30,105 Cr +7.2%YoY
  2. PBT ₹10,820 Cr
  3. PBT Margin 35%
  4. Order Book ₹1.89L Cr +101%YoY
  5. Interest Income ₹2,566 Cr +35%YoY
  6. Inventory Days 263 days

What they filed

Q1 FY27: revenue up 14.4%, net profit up 14.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue5,976 6,957 13,700 4,819 6,629 +11%7,699 +11%13,942 +2%5,515 +14%
EBITDA1,640 1,683 5,295 1,282 1,558 −5%1,871 +11%5,059 −4%1,527 +19%
Net profit1,510 1,440 3,977 1,384 1,669 +11%1,867 +30%4,196 +6%1,590 +15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Growth FY26 Revenue · FY26 · High confidence 8-10%
    guidance is 8%-10%...it may so happen a double-digit growth from next year onwards

    — Barenya Senapati

Margins

  • Operating EBITDA Margin Margins · Sustainable · High confidence 30-31%
    EBITDA will be around 31%...we will be maintaining 31% at operating level

    — Barenya Senapati

  • EBITDA with Interest Income Margins · Sustainable · High confidence 38-39%
    our EBITDA margin is around 38%-39%

    — Barenya Senapati

  • Operating Profit to Revenue Margins · Sustainable · High confidence 27%
    our operating profit to revenue is around 27%, and...we will be maintaining the operating profit to revenue at 27%

    — Barenya Senapati

Deliveries

  • LCA Mark 1A Deliveries CY2025 Deliveries · CY2025 · High confidence 12 aircraft

    Previously 16 per year → 12 aircraft

    GE has promised a supply of 12 engines in this calendar year up to December. This is confirmed

    — D.K. Sunil

  • LCA Capacity Ramp to 24 Deliveries · FY27 · High confidence 24 aircraft/year by FY27
    The 24 aircraft will happen in '26-'27

    — D.K. Sunil

  • LCA Capacity to 30 (with private sector) Deliveries · FY28 · Medium confidence 30 aircraft/year by FY28
    if we add about six from the private sector, we will have a capacity of almost 30 aircraft per annum...In '27-'28 we will be able to get the full advantage

    — D.K. Sunil

  • LCH Prachand Delivery Schedule Deliveries · FY28-FY33 · High confidence 30/year, starting FY28, over 5.5-6 years
    the batch size will be about 30 aircraft per annum...Starting '27, '28 to 5 years from then

    — D.K. Sunil

Engines

  • AL-31FP Delivery Rate Engines · 8 years · High confidence 30 engines/year over 8 years
    240 engines, which we will be delivering at the rate of about 30 engines per annum...over 8 years

    — D.K. Sunil

Development

  • LCA Mark 2 Timeline Development · 2026-2031 · Medium confidence First flight 2026, certification 2029, production 2030-31
    if it starts flying in '26, we expect certification to be completed in '29-30...production should start in '30-'31

    — D.K. Sunil

Order Pipeline

  • Additional Orders Expected Order Pipeline · 1-2 years · High confidence ~Rs 1 lakh crores
    The aggregate value of the order pipeline is estimated at around Rs 1 lakh crores and are expected to materialize within the next one to two years

    — D.K. Sunil

  • Su-30 Upgrade Program Order Pipeline · 5-6 years (after D&D) · Medium confidence ~Rs 60,000 crores for 84 aircraft
    The value is expected to be around Rs 60,000 crores, and that will start kicking in from the 6th year onward

    — D.K. Sunil

Capex

  • 5-Year CAPEX Plan Capex · 5 years · High confidence Rs 14,000-15,000 crores
    comprehensive CAPEX plan for the next five years, with an estimated outlay of Rs. 14,000 to Rs. 15,000 crore

    — D.K. Sunil

Risks & concerns

  • GE engine supply limited to 12 in CY2025 vs 16/year contractual rate

    high

    GE supply chain issues resolved but only 12 engines confirmed for CY2025. Full ramp to contracted rate uncertain. LCA delivery backlog building.

    Both acknowledged

  • ALH fleet partially grounded - Navy/Coast Guard variant

    high

    Coast Guard ALH accident led to Navy/Coast Guard fleet grounding. Army/Air Force cleared. Resolution expected July 2025 after instrumented flight tests.

    Both acknowledged

  • Revenue growth guidance conservative at 8-10% despite massive order book

    medium

    Order book >6x revenue but growth guided at only 8-10%. Capacity constraints and delivery timelines limit faster execution.

    Analyst acknowledged

  • Inventory days ballooned to 263 from 159

    medium

    Management says WIP buildup essential for 18-36 month manufacturing cycles. But significant working capital locked up.

    Analyst downplayed

  • LUH program facing design/software setbacks

    medium

    8 aircraft built but flight control software issues unresolved. 12-unit order still pending despite years of delays.

    Both acknowledged

  • Manufacturing only 23% of revenue despite large order book

    medium

    Only 14-15 platforms delivered in FY25. Ramp-up dependent on GE engines and clearing supply chain bottlenecks.

    Analyst acknowledged

  • Provision of Rs 804 crores for Sukhoi accident during ROH

    medium

    Sukhoi damaged during repair; Rs 804 crore provision made. Discussions with IAF for cost recovery ongoing.

    Management acknowledged

Areas of evasion (1)

  • Exact delivery numbers for FY26 MoU target

Q&A highlights

6 direct
GE Engine Supply Resolution Direct
General Electric has been able to solve their supply chain issues. And the first engine was delivered in April...GE has promised a supply of 12 engines in this calendar year

Critical bottleneck resolved; 12 LCA deliveries now possible in CY2025

Asked by Umesh Raut (Nomura)

Revenue Growth Outlook Direct
guidance at present level is 8%...it may so happen a double-digit growth from next year onwards

Conservative 8-10% guidance despite Rs 1.89 lakh crore order book (>6x revenue)

Asked by Atul Tiwari (JP Morgan)

LUH Program Delays Direct
there have been a couple of setbacks on the design...some flight control software...we expect to conclude this deal for 12 numbers

LUH program facing software/dynamics issues; 8 aircraft built but delivery delayed

Asked by Harshit Patel (Equirus)

Su-30 Upgrade Program Direct
the whole avionics is going to be changed...Rs 60,000 crores...will start kicking in from the 6th year onward

Massive Rs 60,000 crore opportunity but 5-6 year timeline for D&D before production orders

Asked by Harshit Patel

LCA Mark 2 Timeline Direct
first flight of the prototype is expected next year...certification typically three years, so '29...production should start in '30-'31

Clear timeline for next-gen fighter; production 5-6 years away

Asked by Hardik Rawat (IIFL)

ALH Fleet Grounding Resolution Direct
we have instrumented 2 helicopters...we expect a resolution by early July

Navy/Coast Guard ALH still grounded; Army/Air Force cleared. Resolution expected July 2025

Asked by Dipen Vakil (PhillipCapital)

2 min read 6 chapters

Detailed narrative

Order Book Doubles But Execution Challenges Persist

Order book nearly doubled to Rs 1,89,300 crores with Rs 1,02,337 crores new manufacturing orders (156 LCH Prachand Rs 62,777 crores being the largest single order). However, actual platform deliveries dropped to ~14-15 units due to GE engine supply issues and ALH grounding. Revenue grew only 2% reported (7.25% adjusted for prior year one-offs).

GE Engine Supply Chain Resolution

GE overcame COVID-era supply chain issues with sub-vendors re-certifying. First engine delivered April 2025, fitted and tested successfully. GE committed to 12 engines in CY2025. Management expects ~2 engines/month going forward. Third LCA line at Nashik ready to roll out first aircraft in coming months. Capacity target: 24 by FY27, 30 by FY28 with private sector partners (L&T wings, VEM center fuselage, Alpha Tocol rear fuselage, Tata TASL fin/intake).

LCH Prachand - Flagship Order

156 LCH Prachand order (90 Army, 66 IAF) worth Rs 62,777 crores is the largest single order. First batch delivery in 36 months (FY28). Production rate of 30/year over 5.5-6 years. Mistral missile firing successfully conducted. Bangalore and Tumkuru facilities to handle production.

Future Growth Catalysts

Rs 1 lakh crore additional pipeline includes 97 LCA Mark 1A, 143 ALH, 10 Dornier, 40 Dornier upgrades. Su-30 upgrade program worth Rs 60,000 crores (84 aircraft) with D&D approval expected in 6 months. LCA Mark 2 first flight 2026, certification 2029, production 2030-31. CATS Warrior UCAV under R&D.

Profitability and Cost Management

PBT at Rs 10,820 crores (35% of revenue) driven by operating efficiency (27% operating profit) and Rs 2,566 crores interest income. Rs 804 crore provision for Sukhoi accident during ROH. Maharashtra sales tax dispute settled at Rs 2,471 crores vs Rs 10,079 crore demand, fully reimbursed by IAF. Operating EBITDA guided at 30-31%, total EBITDA 38-39%.

New Management, Consistent Strategy

New CMD D.K. Sunil (first interaction with investors) alongside new CFO Barenya Senapati. Strategy unchanged: capacity building (Rs 14-15K cr CAPEX over 5 years), capability building (R&D, indigenization), and proactive procurement. Airbus C-check MRO facility at Nashik progressing with Indigo as initial customer. Revenue expected from FY27.

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