HAL Shares Slide 5% as Private Firms Make AMCA Fighter Jet Shortlist

Shares of Hindustan Aeronautics Ltd (HAL) slide to 5.7% with ₹4,217 on the BSE after reports suggested the state-run aerospace major was not shortlisted for prototype manufacturing under the Advanced Multirole Combat Aircraft (AMCA) programme. The dip came even as the broader indices barely moved, underlining how stock-specific the trigger was.

Meanwhile, the market mood flipped for private defence names. Larsen & Toubro and Bharat Forge traded over a per cent higher, reflecting optimism that they are now closer to participating in what is widely described as India’s most ambitious military aviation programme yet. Tata Advanced Systems Limited (TASL) is the third company reported to have made the cut.

Why Did HAL Fall Out Of The Shortlist?

The evaluation framework appears to have gone beyond legacy positioning to technical capability and execution bandwidth. Companies were assessed on their ability to:

• Absorb the AMCA design

• Demonstrate deep engineering experience

• Prove credentials in integration and testing of complex aerospace systems

Order book stress seems to have been another filter. A very large outstanding pipeline, while usually seen as a strength, can also indicate stretched capacity. HAL’s order book stands at about ₹2.52 trillion, which is more than 8x its FY25 turnover of roughly ₹30,105 crore.

What Is At Stake In The AMCA Programme?

The AMCA aircraft project is positioned as India’s flagship fifth-generation fighter initiative, combining:

• Stealth design

• AI-enabled systems

• Advanced sensors

• Long-range strike capability

• Coordination with unmanned platforms

The platform is expected to anchor India’s air combat strength from the mid-2030s.

The selected industry partner will work with the Aeronautical Development Agency (ADA) to build prototypes before full-scale production begins.

Here are the key numbers shaping the programme:

• Prototype development budget: ₹15,000 crore

• Number of AMCA prototypes planned initially: 5 aircraft

• Expected timeline for final company selection: ~3 months

• Likely initial order from the Indian Air Force: 120 jets

• Target induction timeline: Around 2035

And that may only be the starting scale. Future variants could expand the total fleet size substantially.

How Is The Market Reading This Shift?

For investors, HAL’s exclusion is largely a sentiment event in the near term. Execution on a heavy pipeline of aircraft, helicopters and support contracts is already underway. Missing the AMCA prototype manufacturing phase is being viewed as a strategic miss in a future-defining platform.

Even so, analysts keep pointing to HAL’s sizeable order backlog. That pipeline underwrites revenue visibility for years, not quarters. Its expanding Maintenance, Repair and Overhaul (MRO) business adds a steadier, recurring layer of cash flow. Valuations have cooled too, with the stock hovering near 28× one-year forward P/E.

The other side of the trade looks different. The development is being read as a policy nudge toward deeper private sector participation in advanced defence manufacturing. For L&T, Bharat Forge and TASL, even the prototype phase is more than symbolic. It is an entry ticket into high-end aerospace integration, and that capability can travel into future domestic platforms, and possibly exports.

What Happens Next In The Selection Process?

The final winner is expected to be chosen within the next three months after the shortlisted firms submit detailed commercial proposals, covering cost structures, execution schedules, risk-sharing frameworks and ecosystem readiness. Until then, stock moves may remain headline-driven.

Sources:

Business Standard

NDTV Profit

Economic Times