- 16 Aug 2022
- ICICIdirect Research
HAL reports strong performance in Q1FY23
HAL - 4680 Change: 78.00 (1.69 %)News: Q1FY23 revenue increased substantially by 124.2% YoY to Rs 3,622.5 crore led by lower base and likely better execution in MRO (Maintenance, Repair & Overhaul) contracts. EBITDA margin improved by 781 bps YoY to 22.8% driven by positive operating leverage on strong revenue growth. EBITDA increased sharply by 240.8% YoY to Rs 826.3 crore. PAT increased by 218.5% YoY to Rs 620.1 crore.
View: We believe that strong revenue growth is primarily led by lower base (Q1FY22 revenues declined 7% YoY) and healthy execution in MRO segment. Order Backlog was at Rs 82,153 crore at Mar-22 end (~3.3x FY22 revenues), of which ~75% is from manufacturing contracts led by large scale orders of Tejas LCAs (Light Combat Aircrafts), LCH (Light Combat Helicopters) and ALH (Advanced Light Helicopters). However, company has received significant MRO contracts in FY22 (which have relatively shorter execution period), which has driven the Q1FY23 revenue growth and better margins. Healthy order-book position with strong order pipeline of orders in manufacturing & MRO for the next 3-4 years provides strong earnings visibility.
Impact: Positive.