HAL vs BDL: Comparing Giants in India’s Defence Sector

India’s growing defence sector boasts several prominent players, each contributing to the nation’s self-reliance in military equipment. The Indian government has set the defence production target at US$ 25 billion by 2025 (including US$ 5 billion from exports by 2025). Today, let’s explore two giants: Hindustan Aeronautics Limited (HAL) and Bharat Dynamics Ltd (BDL). Both companies are crucial for India’s defence needs, but they specialise in different areas. Let’s explore their unique strengths and recent financial performance to understand a comparative landscape.

HAL: A Legacy in Aerospace and Defence

Established in 1960, Hindustan Aeronautics Limited is a government-owned enterprise known for its expertise in designing, developing, manufacturing, and maintaining aircraft, helicopters, engines, avionics, and other aerospace systems. From the iconic MiG series to the advanced Tejas fighter jets, HAL has played a vital role in equipping the Indian Air Force.

BDL: A Specialist in Missiles and Weaponry

Founded in 1958, Bharat Dynamics Ltd (BDL) is another state-owned company specialising in the design, development, production, supply, and support of a wide range of missiles and related equipment. The company’s product portfolio includes anti-tank missiles, air-to-air missiles, surface-to-air missiles, and underwater weapons, catering to the needs of the Indian Army, Navy, and Air Force.

Investors Rewarded with Solid Returns

1. Hindustan Aeronautics Ltd (HAL): As of July 02, 2024, the shares of Hindustan Aeronautics Limited delivered a return of ~186.15% in the past year and recorded a 5Y CAGR of ~72.41%. Since listing in 2018, the company has delivered a return of ~843.65%.
2. Bharat Dynamics Limited: As of July 02, 2024, BDL shares generated a return of ~189% in the past year. The stock posted a 5Y CAGR of ~57%. Since listing, Bharat Dynamics has provided a return of ~718.37%.

Higher Revenue and Profits

1. Hindustan Aeronautics Ltd (HAL) reported a 52% year-on-year growth in net profit at ₹4,308 crore for the quarter ended March 31. 2024. The company’s revenue from operations jumped 18% year-on-year to ₹14,768.70 crore in Q4. The same stood at ₹12,494 crore in the corresponding period a year ago.
2. Bharat Dynamics Limited recorded a 7% increase in revenue and an impressive 89.04% rise in profit year-over-year. The company saw meaningful growth compared to the previous quarter, with revenue up by 41.97% and profit increasing by 113.85%.

Defence Manufacturing Industry Outlook

The defence manufacturing sector is a major industry within the Indian economy. The sector is expected to grow faster as worries about national security grow. A corpus of US $12.0 billion (₹1 lakh crore) was set aside for Deep Tech (cutting-edge technologies that leverage advanced scientific discoveries and engineering innovations to solve complex problems) in the Interim Budget 2024–25, which will promote innovation in defence technology in India by providing long-term loans to tech-savvy enterprises. Of these, US$ 2.9 billion (₹23,855 crore) was allotted to DRDO. Within the next 5 to 7 years (2025–2027), the defence ministry projects that the local industry could receive contracts of US$ 57.2 billion (~₹4 lakh crore).

Conclusion

HAL and BDL, both defence giants, have grown their market share in their areas of expertise over the years. This has been further backed by the growing demand in the defence industry. However, to make any investment decision, thorough research should be done.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.