Shares of state-owned defense player Hindustan Aeronautics rose during the early session on October 14 after the Department of Public Enterprises upgraded the PSU to the 'Maharatna' status.
This makes HAL the 14th PSU with the status, further enhancing its operational autonomy and financial powers. Before Hindustan Aeronautics, Oil India was the most recent company to receive "Maharatna" status from the government, granted in August of last year.
With the development, India has 14 "Maharatna" public sector undertakings including prominent names such as BHEL, BPCL, Coal India, GAIL, HPCL, Indian Oil, NTPC, ONGC, Power Grid, SAIL, Oil India, REC, and PFC.
At 9.20 am, HAL shares were trading at Rs 4,519.95 per share, higher by 1.9 percent on the NSE.
To qualify for Maharatna status, a company must meet stringent financial criteria: an average turnover exceeding Rs 25,000 crore, an average annual net worth of more than Rs 15,000 crore, and an average annual net profit of over Rs 5,000 crore over the past three years.
Maharatna status grants PSUs greater autonomy, allowing them to incur capital expenditure on new purchases or replacements without any monetary limit. Additionally, these companies are required to operate independently, without relying on budgetary support or government guarantees.
International brokerage Jefferies has a 'buy' rating on HAL due to its focus on indigenization and exports. "We expect HAL to continue double-digit growth for 3-5 years as the sentiment around defense indigenization and exports remain upbeat. HAL is in a sweet spot as the business has high technology entry barriers," the brokerage firm said.
Jefferies also pointed out that current valuations do not fully reflect HAL's high entry barriers and near-monopoly status.
Elara Securities also rated HAL a 'buy', with a target price of Rs 5,590 per share. They cited the increasing share of indigenization and the untapped export opportunities in the aircraft and helicopter industry as reasons for a re-rating.
In the previous session, HAL shares closed lower at Rs 4,440 on the National Stock Exchange (NSE). The stock has gained nearly 57 percent so far this year. In the past 12 months, the stock has zoomed nearly 126 percent, more than doubling investors' money. In comparison, the benchmark Nifty rallied 27 percent during this period.
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