Target: ₹5,431CMP: ₹4,592.05After more than two years of delays, Hindustan Aeronautic’s (HAL’s) Tejas Mk-1A programme seems to be moving closer to delivery. As per our check, air-to-air and air-to-ground weapon trials (including Astra, ASRAAM missiles and laser-guided bombs) have been completed, while pending software patches are awaiting certification.HAL’s Tejas Mk1A programme is seeing a marked improvement in engine. While it has received seven GE F404-IN20 engines so far, it should get a batch of 10 engines from GE before November 2026. Further, HAL has manufactured first 20 Tejas Mk-1A (another eight-nine are at different stages of fabrication) and flight-tested, parked pending engine fitment. It aims to deliver first squadron of 16-18 aircraft by March 2027.HAL’s order-book remains strong at ₹2.45 lakh crore, led by large wins in FY26 including 97 LCA Tejas, six ALH and eight Dornier Do-228 orders. The management expects about ₹90,000-crore order inflow over FY27/28e (including ROH), which offers multi-year visibility.The management has guided for 10-12 per cent revenue growth in FY27 and sees EBITDA margin at 30-31 per cent. We expect near-term re-rating to be driven by Mk-1A deliveries, GE engine supply discipline. We retain BUY rating on HAL with a DCF-based TP of ₹5,431. Key Risks: (a) Undue delay in engine supply; (b) execution slippages in Mk-1A; (c) WC intensity, and (d) deferral of large defence contracts.Published on July 23, 2026