Council chaired by Defence Minister approves Dornier 228 aircraft acquisition, the PSU multibagger’s order book of Rs 1.20 lakh crore to soar higher?

Acceptance of Necessity (AoN) Granted for 10 Capital Acquisition Proposals Totaling Rs 1.44 Lakh Crore

The Defence Acquisition Council (DAC), the apex decision-making body for the Armed Forces' capital procurements, has granted Acceptance of Necessity (AoN) for 10 capital acquisition proposals worth Rs 1,44,716 crore. This move is aimed at bolstering India’s defence preparedness through modernization and capacity enhancement. Notably, 99 per cent of the total cost is allocated to indigenous sources, aligning with the government's “Make in India” initiative. The acquisitions fall under the "Buy (Indian)" and "Buy (Indian-Indigenously Designed, Developed, and Manufactured)" categories.

Among the approved projects is the Dornier 228 aircraft, manufactured by Hindustan Aeronautics Limited (HAL), a key player in India's defence manufacturing sector. While AoN approval is only the initial step in the defence procurement process and does not guarantee a final order, it signifies the government’s commitment to enhancing the nation’s defence capabilities. This opens up significant opportunities for domestic defence manufacturers like HAL.

In addition to the DAC's approval, the Cabinet Committee on Security recently cleared the procurement of 240 AL-31FP aero-engines for the Indian Air Force’s Su-30 MKI aircraft, further boosting HAL’s order pipeline. This contract, valued at over Rs 26,000 crore, is a major addition to HAL's growing portfolio.

At the close of FY24, HAL’s order book stood at Rs 94,000 crore, which has since surged to Rs 1,20,000 crore with recent orders. This robust pipeline offers strong revenue visibility for the company in the medium to long term.

Hindustan Aeronautics Limited (HAL) plays a crucial role in India’s defence ecosystem, being the only Indian company with comprehensive expertise in aircraft and helicopter manufacturing, as well as providing maintenance and related services. The company’s stock is currently trading at Rs 4,847.25 per share, with a market capitalization of Rs 3.24 lakh crore. HAL’s stock has delivered a remarkable 71 per cent return on a year-to-date (YTD) basis in 2024.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice.

1 comments on article "Council chaired by Defence Minister approves Dornier 228 aircraft acquisition, the PSU multibagger’s order book of Rs 1.20 lakh crore to soar higher?"

Amrit Shah

Very informative, need such more articles for better understanding of markets💯

9/4/2024 8:04 PM

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