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HAL board announces stock split in 1:2 ratio and recommends Rs 15 dividend

Hindustan Aeronautics Ltd. (HAL), a public defence company, has been one of the best-performing PSU stocks that have given YTD stock appreciation of more than 40%. On June 8, the company informed the exchanges that the board is considering a meeting on a stock split. After that, on June 19, the PSU said it would also consider the recommendation of a final dividend for the financial year 2022–23.

In its regulatory filing, the Board of Directors of Hindustan Aeronautics (HAL), in a meeting held on June 27, 2023, Tuesday, has agreed and approved the sub-division or stock split of equity shares. Existing one share of the face value of Rs 10, each fully paid up, will be split into 2 Equity Shares of Rs 5, each fully paid up. The Record Date for the purpose of the sub-division of equity shares shall be Friday, September 29, 2023, if the sub-division is approved by the shareholders at the AGM. Companies propose stock splits so as to boost liquidity in stock if they see stock as having become expensive,

The company has also approved the final dividend, and according to the statement by the company, "A final dividend of Rs 15 per equity share or 150% of Rs 10 each fully paid up for FY23, which shall be paid to the shareholders within 30 days from the date of its approval".

The company has largely received positive feedback from various brokerage firms, taking into consideration its order backlog and order pipeline.

Hindustan Aeronautics Limited (HAL) is a public sector enterprise that specializes in designing, developing, manufacturing, repairing, overhauling, upgrading, and servicing various products, including aircraft, helicopters, aero-engines, avionics, accessories, and aerospace structures. The company operates in five complexes: Bangalore Complex, MiG Complex, Helicopter Complex, Accessories Complex, and Design Complex, with 20 production divisions and 11 R&D centres across India. HAL relies on indigenous research and enters into technology transfer and license agreements to manufacture its products. HAL has been producing and supplying aircraft, engines, accessories, and aerospace structures for various customers. In FY 2022, HAL launched new platform design and development programs, signed MoUs with Rolls-Royce, and entered into collaborations with Max Aerospace & Aviation, the Uganda People's Defence Forces, Safran Helicopter Engines, Israel Aerospace Industries, and the Indian Navy.

During the recent Prime Minister's Visit to the USA, GE Aerospace signed a memorandum of understanding with HAL to jointly produce F414 engines for the Indian Air Force's Light Combat Aircraft Mk2 program. The deal gained attention due to India and the US's Initiative on Critical and Emerging Technologies (iCET). The deal will boost India's jet-producing capacity, as experts estimate it needs at least 756 fighter aircraft to fight a simultaneous two-front war against adversaries.

The stock is trading at a PE of 21x. The stock has increased over 100% in one year, over 250% in two years, and over 500% from COVID lows. For the March quarter, total revenue jumped over 100% to Rs. 13,216 crore. Profit after tax has seen a rise in Q-o-Q of 145% to Rs. 2831 crore. The operating profit margin has seen an improvement of 13% to 24.37%.

ANNUAL FY 2023 FY 2022 FY 2021 FY 2020 FY 2019
Total Revenue 28,597.58 25,604.95 23,112.77 21,732.08 20,383.74
Total Revenue Growth (%) 11.69 10.78 6.35 6.61 5.72
Total Expenses 22,090.95 20,380.19 18,842.61 17,889.03 16,659.83
Total Expenses Growth (%) 8.39 8.16 5.33 7.38 4.32
Profit after Tax (PAT) 5,827.74 5,080.04 3,239.46 2,873.17 2,328.63
PAT Growth (%) 14.72 56.82 12.75 23.38 12.31
Operating Profit Margin (%) 24.37 21.45 19.9 19.55 19.45
Net Profit Margin (%) 21.64 20.63 14.23 13.4 11.63
Basic EPS (₹) 174.28 151.92 96.87 85.92 69.63


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