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HAL Reports Strong Q3 Performance Amid Defense Sector Demand Surge

12th February, 2024| By Business Desk
Embraer-KC-390-Paris-Air-Show-2019-Le-Bourget
Embraer KC 390 at Paris Air Show 2019 Le Bourget | Credit: Matti Blume
  • Hindustan Aeronautics Ltd (HAL) witnessed a 9% rise in third-quarter profit, attributed to increased demand for aircraft from the defense sector and inventory-related gains.
  • HAL’s consolidated net profit for the quarter ending December 31 amounted to Rs 1,261 crore ($151.92 million).
  • The surge in profit aligns with a broader trend seen among capital goods and manufacturing companies, buoyed by the Indian government’s emphasis on higher capital expenditure.
  • Notable beneficiaries of this trend include defense equipment manufacturers such as Zen Technologies, Bharat Electronics, and Bharat Dynamics.
  • HAL’s revenue rose by 7% to Rs 6,061 crore during the October-December period, while total expenses saw a decline of over 2%, partly due to gains from inventory adjustments, despite a significant increase in raw material costs.

Hindustan Aeronautics Ltd (HAL) announced a notable increase of 9% in its third-quarter profit, bolstered by heightened demand for aircraft from the defense sector and a gain related to inventory. In the fiscal quarter ending on December 31, the consolidated net profit amounted to Rs 1,261 crore ($151.92 million), as stated in the filing by the state-owned aerospace and defense entity.

This surge in profit aligns with a broader trend witnessed among capital goods and manufacturing companies, attributable to the impetus provided by the Indian government’s emphasis on elevated capital expenditure. This emphasis was particularly evident in the last complete budget unveiled in February 2023, preceding the forthcoming general elections slated for this year. Noteworthy beneficiaries of this governmental impetus encompass defense equipment manufacturers such as Zen Technologies, Bharat Electronics, and Bharat Dynamics, all of which registered augmented profits during the December quarter.

HAL, a key player whose clientele comprises the Indian Army, Navy, and Air Force, alongside prominent aerospace entities like Airbus and Boeing, reported a 7% increase in revenue, totaling Rs 6,061 crore during the October-December interval. However, the company refrains from providing a detailed breakdown of revenue by segment. Concurrently, HAL’s total expenses witnessed a decline of over 2%, settling at Rs 4,838 crore, buoyed by gains amounting to Rs 111 crore stemming from inventory-related adjustments. Notably, in the previous year, the company had reported expenses of Rs 255 crore to accommodate its inventory of finished and unfinished goods, as disclosed in the exchange filing. HAL, however, abstains from furnishing a precise breakdown of these inventory adjustments. Conversely, the cost of raw materials experienced a surge of nearly 37%, attributed to the global escalation in prices of certain metals, including steel, observed during the quarter.