HAL shares gained 2.82% to ₹4,914.85 on the BSE on Friday, following the latest engine delivery announcement from GE Aerospace. The Nifty India Defence index surged 1.6% or 154 points to 9,825.20 on Friday, as reported by NSE data. According to market reports, heavyweight defence stocks like Hindustan Aeronautics (HAL), Astra Microwave, and MTAR Technologies powered the sectoral benchmark higher during Friday's trading session. The index had closed at 9,670 points in the previous session, showing a significant upward movement driven by positive sector developments.
The primary catalyst for the sector's rally was GE Aerospace's delivery of three more F404-IN20 engines to HAL in August 2026, as reported by ANI. This latest shipment takes cumulative Tejas Mk1A engine deliveries to 10 units, up from the previous 7 units. According to Goldman Sachs, GE Aerospace shipped three F404 engines to HAL in August, compared with its estimate of two, representing faster-than-expected delivery progress. A GE Aerospace spokesperson confirmed that HAL is yet to receive the engines in Bengaluru, with the company expecting two engines next week and one later. The India-made fighter jet remains more than two years behind its original delivery schedule to the Indian Air Force due to supply constraints, though media reports suggest GE Aerospace has assured delivery of 20 F404 engines during the second half of 2026. The Indian Air Force has ordered 180 LCA Tejas Mk1A aircraft from HAL, with the IAF placing its first order in February 2021 for 83 aircraft comprising 73 fighter variants and 10 trainers, followed by a second order for 97 additional aircraft in September last year at a cost of more than ₹62,370 crore.
Goldman Sachs has maintained its 'Buy' call on HAL with a target price of ₹5,870 per share, citing the latest engine deliveries as positive developments. According to Goldman Sachs, faster engine supplies are positive for HAL as availability of the F404 engines had been a key bottleneck for Tejas Mk1A deliveries. The brokerage noted that 30 Mk1A airframes have already been assembled and timely engine supplies should support HAL's delivery ramp-up and reduce execution risk. The firm emphasized that engine availability has been a major factor behind delays in the production and delivery of the LCA Mk1A aircraft, making the current supply progress particularly significant for the programme's timeline. As per its channel checks, 30 Mk1A airframes already assembled, with the timely delivery of engines from GE remaining an important factor that should facilitate HAL's planned ramp up in Tejas Mk1A deliveries, thus reducing key execution risk.
HAL share price gave a breakout from a downward-sloping trendline on the weekly chart four weeks ago, according to Sudeep Shah - Head of Technical and Derivatives Research at SBI Securities. The stock subsequently moved higher before retracing to retest the trendline support, where it has once again shown signs of a bounce. "The PSU defence stock continues to trade above its key short and long-term moving averages, maintaining a positive technical setup. The daily RSI has also turned higher, indicating renewed bullish momentum. The ₹4,750 – ₹4,720 zone remains the immediate support area," said Shah. According to him, HAL share price is likely to maintain its upward bias as long as it sustains above this zone. The latest F404 engine supply represents incrementally positive developments for HAL, with the brokerage noting that engine availability has been a key bottleneck delaying Tejas Mk1A deliveries.
The engine deliveries come as HAL currently has an annual production capacity of 24 aircraft, with engine supplies critical to ramping up production capacity. The company currently has a market capitalisation of around ₹3.19 lakh crore and has delivered multibagger returns of over 140% in three years and 583% in five years. Over the longer term, HAL shares have gained more than 7% in the past year, reflecting strong investor confidence in the company's ability to meet defence sector demands despite previous supply constraints. According to Goldman Sachs, the latest F404 engine supply represents incrementally positive developments for HAL, with the brokerage noting that engine availability has been a key bottleneck delaying Tejas Mk1A deliveries. The ₹5,375-crore contract signed in 2021 covers GE Aerospace's supply of 99 F404-IN20 engines, with the company having previously completed its commitment to HAL in 2016 by delivering 65 F404-IN20 engines for the original Tejas LCA programme. As per the contract, HAL will deliver the first three aircraft in the third year, and 16 aircraft per year for subsequent five years, with all 83 aircraft delivery scheduled to be completed in eight years from the contract signing date.
