Why did the shares of Hindustan Aeronautics rally so sharply on 12 August?
Answer
Answer
HAL stock had already touched its 52-week high and has been buoyant ever since the government announced that 101 items of defence will be embargoed from imports. HAL is one of the major beneficiaries of this move.
In addition, the government approved the acquisition of Make in India equipment worth Rs.8722 crore. A large part of this will go towards the purchase of fixed wing aircraft that HAL has designed and developed and is likely to be a big boost for the company.
The Defence Acquisition Council or the DAC approved procurement of 106 basic trainer aircraft from HAL. The idea is to address basic training requirements of the Indian Air Force. A total of 70 aircraft will be initially procured from HAL.
The defence embargo on 101 items is likely to generate orders worth Rs.4 trillion for Indian defence companies. It would boil down to Rs.80,000 crore worth of orders per year, with a good chunk of it going to HAL. That is keeping the stock buoyant.