CLSA Ltd. (formerly known as Credit Lyonnais Securities Asia) initiates buy on HAL. Read why?
CLSA has initiated a buy on Hindustan Aeronautics Ltd (HAL) with a target price of Rs.1,450; 30 percent upside potential from current levels.
The firm sees a 10-year long opportunity for this company.
Keen Opportunity
The firms eyes a 10-year long opportunity for the company as it is set to soar on a USD 93 billion manufacturing opportunity of India’s new air fleet over the next 10 years.
- CLSA also expects 14 percent EPS CAGR for HAL in the next five years between FY21 and FY26.
- And, despite this long runway, the stock is trading at 10 times FY23 EPS.
- It is in comparison to the global peers at 15 times and Indian defence companies at over 14 times.
HAL soars to the sky
Some, not all, brokerages can change the point of view of the market. They are rare, but when they say things the market tends to listen.
No surprise then that CLSA Asia-Pacific’s bullish initiation report on Hindustan Aeronautics got the Street chirping.
HAL can grow earnings at 14 per cent annually for the next five years as the government of India raises its expenditure on modernising its defence.
Brokerage
“HAL’s integrated design-to-production capabilities, market access, growing after-market, net-cash position and operating leverage provide long-term thrust levers,” the brokerage said.
Shares of HAL rose over 4% in agreement but CLSA believes that the gravy train or gravy flight of HAL is just getting started.
The stock Market
The stock market can be a harsh place, sometimes even harsher than the comment section on Twitter.
One moment you are the toast of every investor, the other you are a disappointment. Judgement is instant. No one knows this roller-coaster ride better than India’s largest FMCG company, HUL.
Shares soar up!
Shares of the company popped over 2 per cent after the company announced a decent set of numbers for the June quarter with volumes bettering most estimates.
Yet an hour later, all those gains were wiped out as the stock closed over 2 per cent lower.
The reason for the flip in mood?
Well, investors realized that the lower-than-expected operating margins in the June quarter were something they couldn’t ignore after all.
Not only this, plus, the company’s price hikes in the quarter weren’t sufficiently high enough to protect margins leaving investors worried over the company’s growth.
Information Source: CNBCTV News India | The Economic Times
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