- Net profit climbed 30% YoY to ₹1,867 cr, beating most analyst forecasts.
- Revenue rose 10.7% to ₹7,699 cr, driven by a historic order book worth up to ₹2.6 trillion.
- First interim dividend of ₹35 per share signals strong cash generation.
- Technical indicators show a short‑term pullback opportunity around ₹4,380‑₹4,470.
- Sector peers like Tata Defence and Adani Aerospace are scrambling to match HAL’s backlog.
You missed HAL’s Q3 surprise – and your portfolio felt the pain.
Why HAL’s 30% Profit Surge Beats Industry Benchmarks
HAL reported a net profit of ₹1,867 cr for Q3 FY26, a 30.3% lift from the same quarter last year. The revenue uplift of 10.7% to ₹7,699 cr reflects a healthier top line than the 9‑10% growth corridor that most market forecasts projected. The jump is underpinned by an 11.2% rise in EBITDA to ₹1,871 cr, a key profitability metric that strips out interest, tax, depreciation and amortisation, giving a clearer picture of operating cash flow. In an industry where defence contracts can be multi‑year and capital intensive, this margin expansion signals disciplined cost control and pricing power.
Impact of HAL’s Record Order Book on the Indian Aerospace Landscape
HAL now boasts an order book of ₹2.5‑₹2.6 trillion, the largest ever for the company. The pipeline includes 180 Mk1A fighter jets, a potential Mk2 development, and a Memorandum of Understanding to produce the SJ‑100 regional jet domestically. Even at a conservative execution rate, the Mk1A backlog will keep production lines busy for roughly eight years, while ancillary projects stretch the timeline to a decade or more. This long‑haul demand provides a cushion against short‑term market volatility and supports a steady stream of cash inflows.
For the broader Indian aerospace sector, HAL’s dominance forces competitors like Tata Advanced Systems and Adani Aerospace to accelerate their own defence and civil aviation programmes. Both rivals have announced ambitious R&D spend and are courting foreign joint‑ventures to close the capacity gap. The ripple effect is a faster‑maturing domestic supply chain, which could reduce import dependence and improve the overall industry EBIT margins over the next five years.
How the AMCA Exclusion Reshapes Competitive Dynamics with Tata & Adani
Recent news that HAL has been excluded from the Advanced Medium Combat Aircraft (AMCA) programme surprised many observers. Analysts at ICICI Securities argue the impact will be muted because HAL’s order book already guarantees full utilisation for the next 10‑11 years. However, the exclusion opens a strategic window for Tata Advanced Systems, which is aggressively positioning itself as a potential AMCA partner.
Historically, when a major OEM loses a flagship defence contract, peers either seize market share or experience a temporary dip in order flow. The 2013‑14 scenario, where HAL lost a portion of the Tejas‑Mark 2 contract, saw its revenue growth dip by 2% YoY before the backlog from other platforms compensated. If Tata captures the AMCA pipeline, HAL may need to accelerate the Mk2 development or seek export opportunities to maintain growth momentum.
Technical Outlook: RSI Divergence and the Next Pullback Zone
Motilal Oswal’s technical lead flags a positive divergence on the Relative Strength Index (RSI), a momentum oscillator that compares the magnitude of recent gains to recent losses. When the price makes lower lows while the RSI makes higher lows, it often precedes a short‑term rally. The current RSI divergence suggests a potential bounce, but analysts caution that the next resistance band lies between ₹4,380 and ₹4,470.
Lakshmishree’s research adds that the ₹4,400‑₹4,600 corridor now acts as a critical pull‑back resistance. If the stock fails to break above this zone with conviction, the broader bias could turn negative, making a sell‑on‑rise strategy attractive for risk‑averse investors.
In practical terms, a trader could target a short‑term entry near ₹4,150‑₹4,200, set a stop‑loss just below ₹4,050, and aim for a modest profit near the ₹4,400‑₹4,470 resistance. The risk‑reward profile remains favourable as long as the underlying fundamentals stay intact.
Investor Playbook: Bull vs. Bear Scenarios for HAL
Bull Case
- Continued execution of the massive order book fuels revenue growth above 12% YoY for the next three years.
- Interim dividend of ₹35 per share boosts total shareholder yield, attracting income‑focused investors.
- Potential entry into the AMCA market via a joint venture or export of Mk2 variants adds a new revenue stream.
- Technical RSI divergence triggers a short‑term rally, pushing the stock toward the ₹4,600 resistance level.
Bear Case
- Execution delays on the Mk1A and Mk2 programmes extend delivery timelines, eroding cash flow.
- Exclusion from the AMCA programme forces HAL to cede future defence market share to Tata Advanced Systems.
- Rising raw material costs squeeze margins, offsetting the benefits of cost‑discipline.
- Technical resistance holds firm at ₹4,470, leading to a prolonged correction toward the ₹4,150 support zone.
Investors should monitor two key catalysts: the quarterly execution reports for the Mk1A backlog (expected in Q4 FY26) and any formal announcements regarding HAL’s participation in the AMCA or alternative fighter programmes. A clear signal on either front will likely swing sentiment and dictate whether the stock trades at a premium or discounts towards the lower target.