- 18 Mar 2024
- ICICI Securities
MOD SIGNS CONTRACTS WORTH RS 2890 CRORE WITH HAL
News: Ministry of Defence signed a contract with Hindustan Aeronautics (HAL) for Mid Life Upgrade (MLU) of 25 Dornier aircrafts along with associated equipment for the Indian Navy at a cost of around Rs 2890 crore. The MLU for Dornier aircrafts will be executed over a period of 6.5 years and it includes an upgrade to incorporate state-of-the art avionics systems and primary role sensors. The upgrade would significantly enhance the operational capability of the Dornier aircrafts of the Indian Navy.
Views: Govt approved AoN (acceptance of necessity) of mid-life upgrade of 60 Dornier aircrafts in Sept-2023, of which contract of 25 aircrafts have been received now by HAL. Company's order backlog is estimated to be at ~Rs 88000 crore (3x TTM revenue). Order pipeline remains very strong for next 2-3 years, considering the procurement approvals accorded by the govt in aircrafts, helicopters and aero-engines with continuous flow of repair & overhaul contracts. We believe the execution of new contracts will see considerable improvement led by increasing indigenisation of engines, electronic systems and other components. Data Patterns is also expected to be the key beneficiary in Dornier aircrafts upgrade program as it is involved in developing sensors used in radars & ESM (Electronic Surveillance & Monitoring).
Impact: Positive