HAL shares gain 3% as GE engine supplies pick up; Goldman Sachs sees 23% upside

Shares of Hindustan Aeronautics Ltd. (HAL) rose about 3% on Friday, September 4, after GE Aerospace delivered three more F404 engines to the company in August, taking the total number of engines delivered for the Tejas Mk1A programme to 10.

The latest deliveries mark an improvement in the pace of engine supplies, which have been a key bottleneck for HAL's Tejas Mk1A production and aircraft deliveries.

In April 2026, HAL had said that it expected to receive 20 engines between June and December 2026, with the estimate being described as conservative.

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At the end of FY26, HAL had received six engines from GE Aerospace. The company had then indicated that aircraft testing was underway and that it expected engine supplies to stabilise by August-September, allowing deliveries of the aircraft to begin around the same period.

HAL is targeting the delivery of 20 Tejas Mk1A aircraft in FY27. The company had initially targeted 12 aircraft for FY26, but subsequently cut the target to 5-6 aircraft. No Tejas Mk1A aircraft had been delivered as of the latest update.

The Indian state-run defence major has an order worth around ₹48,000 crore for the Tejas Mk1A. Its overall order book stood at around ₹2.5 lakh crore at the end of FY26.

GE Aerospace had entered into a contract with HAL in 2021 for the supply of 99 F404-IN20 engines for the Tejas Mk1A programme, for around ₹5,375 crore.

The delays in engine deliveries have affected the pace of aircraft production, with reports indicating that HAL is seeking contractual penalties or liquidated damages from GE Aerospace over the delays.

Goldman Sachs says Buy HAL

Goldman Sachs has a "Buy" rating on HAL with a target price of ₹5,870, implying a 23% upside in comparison to Thursday's close.

The brokerage said the improved pace of engine supplies is a positive for HAL, as engine availability remains the key bottleneck for the Tejas Mk1A programme.

According to Goldman Sachs' channel checks, around 30 Tejas Mk1A airframes have already been assembled. Timely engine availability could therefore facilitate the ramp-up in aircraft deliveries and reduce execution risks for HAL.

HAL Stock reaction

Shares of Hindustan Aeronautics are trading 2.4% higher on Friday at ₹4,880.6. The stock is up 5% over the last one month and has extended its year-to-date gains to 11%.