Why This Large Cap Defence Stock Is On The Up Today After Nosediving Last Week

Shares of Hindustan Aeronautics Limited (HAL) were gaining in early trading on Monday following its recent agreement with the Ministry of Defence to modernise 25 Dornier aircrafts.

What Happened: Under the agreement inked on March 15, 2024, HAL is tasked with executing a mid-life upgrade (MLU) for 25 Dornier Aircraft, along with associated equipment, for the Indian Navy, at a cost of ₹2,890 crore.

This agreement entails incorporating cutting-edge Avionics Systems and Primary Role sensors, significantly enhancing the operational capabilities of the Indian Navy’s Dornier aircraft for tasks such as maritime surveillance, coastal surveillance, electronic intelligence and maritime domain awareness.

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Additionally, it will enable the aircraft to undertake secondary roles like search and rescue, medical or casualty evacuation and communication links.

HAL anticipates that the MLU project for 25 Dornier Aircraft will create employment opportunities equivalent to 1.8 lakh man-days over its six-and-a-half-year execution period, signalling a positive impact on both operational capabilities and job creation within the defence sector.

Price Action: HAL’s share price was up 0.5% at ₹3,115 in the morning session of trade on Monday. The stock lost over 6% last week after the first crash of a HAL-designed Tejas fighter plane.

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