State-owned planemaker poised to begin deliveries of long-delayed fighter jet in first half of FY27 as GE engine supply finally ramps up, says Antique Stock Broking, which flags a Rs 4.5 trillion pipeline ahead
Hindustan Aeronautics Ltd. is approaching what could be a defining year, with the state-owned defence manufacturer poised to begin deliveries of its long-delayed Tejas MK-IA fighter jet in the first half of FY27 — ending a two-year supply chain saga that has tested investor patience and strained the Indian Air Force’s combat readiness.
In a research note, Antique Stock Broking called FY27 an “inflection point” for the Bengaluru-based aerospace giant, retaining its buy rating with a revised target price of Rs 5,427 — valuing the stock at 35 times its estimated FY28 earnings per share. The brokerage trimmed FY27 and FY28 estimates marginally to account for slippage, but argued the structural growth story remains firmly intact.
“FY27 is expected to be inflection point in terms of delivery of Tejas MKIA,” Antique noted, pointing to the recent completion of weapon integration trials and General Electric’s commitment to ramp up engine deliveries in the second half of calendar year 2026.
Engine Bottleneck Easing
The Tejas MK-IA programme has been hostage to a single, intractable problem: engines. GE has delivered just five F-404 engines to date against a contracted timeline that expected far more, with a sixth scheduled for April 2026. The American firm has now committed to supplying an additional 20 engines in the second half of this calendar year, a cadence that — if maintained — would unblock a production line that has been running cold despite finished airframes sitting ready on the tarmac.
HAL has also opted to impose liquidated damages on GE for the delays, a move Antique said would “pressurise to streamline the engine supply.” The company has five aircraft fully ready for handover and additional airframes prepared, awaiting only the Category A engines and final clearance from the Centre for Military Airworthiness and Certification.
To absorb the expected ramp-up, HAL has opened a third assembly line at its Nasik facility, lifting annual production capacity to 24 aircraft. A meeting between HAL’s senior management and the Indian Air Force is expected by the end of May 2026 to finalise the revised induction timeline.
Pipeline Twice as Big
The delivery delays have not dented HAL’s order momentum. The company closed the December quarter with an order backlog of roughly Rs 2.5 trillion, anchored by the Rs 1 trillion contract for 180 LCA MK-1A aircraft, a Rs 628 billion deal for 156 Light Combat Helicopter Prachand units, and Rs 255 billion worth of AL-31FP engines for the Sukhoi-30 fleet.
Antique estimates an addressable opportunity of Rs 4.5 trillion over the next four to five years, including anticipated contracts for the Tejas MK-II, the Twin Engine Deck Based Fighter, repair-and-overhaul orders worth Rs 200 billion, and near-term deals covering Do-228 transport aircraft, ALH Dhruv helicopters and 60 utility helicopters for the Indian Navy. Manufacturing lines, the brokerage said, are likely to remain busy till FY32.
Civil Aerospace, UAVs and Exports as the Next Leg
Beyond its core defence franchise, HAL is moving to broaden its revenue base. Management has set a target of scaling the civil aerospace business — covering civilian aircraft and drones — to roughly 25% of revenue over the next decade, up from a sliver today. A memorandum of understanding signed with Russia’s United Aircraft Corporation to produce the SJ-100 regional jet for domestic operators sits at the centre of that ambition, with HAL expecting demand for more than 200 aircraft in the segment as India pushes regional connectivity.
The unmanned aerial vehicle portfolio is the other diversification bet, targeting a domestic market that Antique pegs at $2 billion. Programmes including CATS, the Kiran Testbed and the Medium Altitude Long Endurance UAV are transitioning from design into prototype testing.
Exports, currently just 3% of sales, offer further upside. HAL is in active discussions with multiple countries to sell the Tejas MK-IA, and has expanded its pitch to include the Light Combat Helicopter, Light Utility Helicopter and HTT trainer.
The near-term overhang, Antique acknowledged, is uncertainty around the Advanced Medium Combat Aircraft programme. But with the engine supply finally unblocking and a pipeline running into trillions of rupees, the brokerage’s view is that the structural story has barely begun.