HAL Shares Marginally Slip After Q1 Results

Hindustan Aeronautics (HAL) announced on Wednesday that its Q1 FY25 earnings and consolidated net profit for the quarter ending June 30, 2024 (Q1 FY25) increased by 76.5 per cent to Rs 1,437.2 crore from Rs 814.2 crore in the same period the previous year.

In the same quarter of the previous fiscal year, other income was Rs 736.5 crore, compared to Rs 409.9 crore.The defence company reported revenue for the June 2023 quarter of Rs 3,915.3 crore, up 11 per cent YoY to Rs 4,347.5 crore.

EBITDA Q1 FY25

Earnings before interest, taxes, depreciation, and amortisation, or EBITDA, increased by 13 per cent to Rs 990.6 crore during the same period last year from Rs 876.8 crore. Its margins were 22.8 per cent as opposed to 22.4 per cent during the same time last year.

The company's shares were down 1.13 per cent to Rs 4,648 per share on the National Stock Exchange at 3:21 pm. The stock, which over the previous 18 to 24 months has been a multibagger, has dropped more than 15 per cent in the last 30 days.

A significant obstacle that HAL encountered lately was the sharp decline in engine supply from General Electric (GE).

Engine problem fiasco

According to reports, the US aerospace giant was awarded a contract in 2021 to supply 99 F404-IN20 engines for the Tejas Mk1A fighter aircraft. Delivery of the engines is expected to start in late August 2023. Recent events, however, suggest that the promised supply will not materialise as promised.

GE plans to deliver just two F404-IN20 engines in September, as opposed to the 16 engines that were originally expected. This puts a cloud over the Tejas fighter's production schedule, amounting to a shortfall of almost 14 engines for the year.