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News: Hindustan Aeronautics has signed an amendment to the LCA IOC (Light Combat Aircraft Initial Operational Clearance) Contract. The value of the Contract has been revised from Rs 2700.87 crore to Rs 5077.95 crore.
Views: Hindustan Aeronautics (HAL) received 20 LCA IOC contract in March 2006, which has already been executed and delivered to the Indian Air Force. Amendment in this contract had been sought by the company in 2018 as part of Change Order on account of changes in build standards for Integration entailing procurement of additional Line Replaceable Units (LRUs), raw materials, composite materials, bought out items and consumables, tooling etc. With signing the amendment now, we expect the company will account for this additional change order value (Rs 2377 crore) in Q4FY24 revenues. Since the change order value is significant, Q4FY24 total revenue growth is expected to be 25%+ YoY as against earlier expectations of ~8% YoY.
Impact: Positive