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Time of India
2 days ago
- Business
- Time of India
HAL Order Book FY26: HAL's ₹2.5 Lakh Crore Order Book at Risk Due to Talent Shortage, ET Infra
Advt Advt By , ET Bureau HAL's order book is expected to touch ₹2.5 lakh crore in FY26. That is eight times the FY25 turnover. The huge order backlog, coupled with facile assumptions about HAL's purported prowess in execution, drives optimism about the company. Execution is the key when faced with a mounting order pipeline, and that is where trouble is 37 years, HAL's turnover soared from ₹616 crore in FY87 to ₹30,118 crore in FY24, growing at a CAGR of 11.08 per cent. Meanwhile, manpower shrank by 46 per cent, from 44,123 to 23,766. This stark contrast has fostered a dangerous illusion - that cutting staff is the key to growth and profitability. Such a belief is not just flawed; it's a recipe for HAL, while there are severe shortages among workmen, the situation in the executive cadre is even more alarming. The organisational structure increasingly resembles an army of officers and generals - with too few soldiers to execute the shortage at the working level, particularly in the design department, is a review meeting in 2022, the head of a Lucknow-based HAL R&D centre presented the status of 175 line-replaceable units (LRU) design projects. There are only 75 designers to handle these. Ideally, each project should have one to two was a time when almost 350 designers worked exclusively for the Light Combat Helicopter (LCH) project in Rotary Wing Research and Design Centre (RWRDC), the centre of excellence for helicopter R&D. Today, with about 400 designers, RWRDC handles multiple projects such as Indian Multi-Role Helicopter (IMRH), Deck-Based Multi-Role Helicopter (DBMRH), and Utility Helicopters-Maritime (UHM) projects, along with other minor the design domain, knowledge transfer happens from generation to generation. The missing generation at the bottom means that when the middle-level designers retire over the next 10-15 years, there will be a crippling lack of knowledge and expertise. If this situation persists, HAL's capability to design and develop new aircraft and helicopters will be HAL's manpower has become half of what it was some time ago, and the number of projects has risen, the staffing is inadequate even if both the junior and middle levels are considered as one joint cluster. Today, both these layers are overburdened, fatigued and outsourcing is a still-born idea. The existing designers will be forced to train greenhorns recruited by contractors to make them somewhat competent. Usually, owing to low salaries paid by vendors, most of these engineers leave once they pick up some competency. So, another set of rookies will come on board, and the training process will be repeated. This is a waste of to this HAL's inexplicable reluctance to implement any people-friendly initiatives such as flexitime or a five-day week. HAL conducts periodic HR surveys. However, except for HR staff and the top management, nobody knows about these findings and interventions done to address the present efforts to manage the shortage by hiring rookie engineers through contractors are pursued, it would be the death knell for R&D capability within should do the 200 engineers yearly for the next 5 years for R&D 1,000 engineers yearly for the next 5 years for production and MRO flexitime of 1 hr for executives, and 30 mins for a 5-day week at least in design of entry-level engineers is less than ₹10 lakh annually. So, this recruitment plan will not add more than ₹120 crore a year, 0.6 per cent of HAL's total cost of ₹19,919 crore in FY24. Additional staffing will not dent profits. The choice for HAL is clear - recruit or perish.
Economic Times
2 days ago
- Business
- Economic Times
Can HAL survive its staffing crisis amidst soaring order backlogs?
Yes, more spanners in the work HAL's order book is expected to touch ₹2.5 lakh cr in FY26. That is eight times the FY25 turnover. The huge order backlog, coupled with facile assumptions about HAL's purported prowess in execution, drives optimism about the company. Execution is the key when faced with a mounting order pipeline, and that is where trouble is 37 years, HAL's turnover soared from ₹616 cr in FY87 to ₹30,118 cr in FY24, growing at a CAGR of 11.08%. Meanwhile, manpower shrank by 46%, from 44,123 to 23,766. This stark contrast has fostered a dangerous illusion - that cutting staff is the key to growth and profitability. Such a belief is not just flawed; it's a recipe for disaster. At HAL, while there are severe shortages among workmen, the situation in the executive cadre is even more alarming. The organisational structure increasingly resembles an army of officers and generals - with too few soldiers to execute the mission. The shortage at the working level, particularly in the design department, is serious. At a review meeting in 2022, the head of a Lucknow-based HAL R&D centre presented the status of 175 line-replaceable units (LRU) design projects. There are only 75 designers to handle these. Ideally, each project should have one to two engineers. There was a time when almost 350 designers worked exclusively for the Light Combat Helicopter (LCH) project in Rotary Wing Research and Design Centre (RWRDC), the centre of excellence for helicopter R&D. Today, with about 400 designers, RWRDC handles multiple projects such as Indian Multi-Role Helicopter (IMRH), Deck-Based Multi-Role Helicopter (DBMRH), and Utility Helicopters-Maritime (UHM) projects, along with other minor ones. In the design domain, knowledge transfer happens from generation to generation. The missing generation at the bottom means that when the middle-level designers retire over the next 10-15 years, there will be a crippling lack of knowledge and expertise. If this situation persists, HAL's capability to design and develop new aircraft and helicopters will be HAL's manpower has become half of what it was some time ago, and the number of projects has risen, the staffing is inadequate even if both the junior and middle levels are considered as one joint cluster. Today, both these layers are overburdened, fatigued and outsourcing is a still-born idea. The existing designers will be forced to train greenhorns recruited by contractors to make them somewhat competent. Usually, owing to low salaries paid by vendors, most of these engineers leave once they pick up some competency. So, another set of rookies will come on board, and the training process will be repeated. This is a waste of to this HAL's inexplicable reluctance to implement any people-friendly initiatives such as flexitime or a five-day week. HAL conducts periodic HR surveys. However, except for HR staff and the top management, nobody knows about these findings and interventions done to address the present efforts to manage the shortage by hiring rookie engineers through contractors are pursued, it would be the death knell for R&D capability within should do the following. Recruit 200 engineers yearly for the next 5 years for R&D centres. Recruit 1,000 engineers yearly for the next 5 years for production and MRO divisions. Implement flexitime of 1 hr for executives, and 30 mins for workmen. Implement a 5-day week at least in design centres. CTC of entry-level engineers is less than ₹10 lakh annually. So, this recruitment plan will not add more than ₹120 cr a year, 0.6% of HAL's total cost of ₹19,919 cr in FY24. Additional staffing will not dent profits. The choice for HAL is clear. Recruit or perish. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Why failed small businessmen die by suicide when those behind big blow-ups bounce back? Explainer: The RBI's LAF corridor and its role in rate transmission Yet another battle over neem; this time it's a startup vs. Procter & Gamble Everything 'e' won't make you a millionaire. Just look at e-pharmacies Stock Radar: Breakout from falling trendline makes Glenmark an attractive buy; check target & stop loss Weekly Top Picks: These stocks scored 10 on 10 on Stock Reports Plus These large- and mid-cap stocks can give more than 25% return in 1 year, according to analysts For long-term investors: Management with a track record; 5 stocks with upside potential of up to 27%
Time of India
20-05-2025
- Business
- Time of India
UBS downgrades HAL shares to neutral, stock down 3% on muted near-term outlook
HAL shares: Global brokerage UBS downgraded the stock to 'Neutral' from 'Buy', stating that near-term catalysts have already been factored into the current price. HAL shares: UBS has set a new 12-month price target of Rs 5,600 per share for HAL, indicating a potential upside of 14.5% from its Monday closing price of Rs 5,016. The brokerage had previously set the target at Rs 5,440. Tired of too many ads? Remove Ads UBS flags slower order book growth Tired of too many ads? Remove Ads Revenue ramp already priced in Valuation and outlook Shares of Hindustan Aeronautics Ltd (HAL) fell as much as 2.8% to Rs 4,877.25 on Tuesday after global brokerage UBS downgraded the stock to 'neutral' from 'buy', citing that near-term triggers have already been priced in and lowering its order book growth set a new 12-month price target of Rs 5,600 per share, implying a potential upside of 14.5% from HAL's Monday closing price of Rs 5,016. The brokerage's previous target was Rs 5,440.'We downgrade HNAL to Neutral from Buy, as we believe: 1) near-term drivers (resolution of the GE F404 engine delay, the Light Combat Helicopter order, the LCA MK1A fighter aircraft order overhang) are now in the price,' UBS brokerage trimmed its FY26-28 order book compound annual growth rate (CAGR) estimate to 14% from 21% following recent management guidance that indicated a longer timeline for the Su-30 MKI upgrades and LCA Mark 2 also cut its manufacturing revenue growth estimates and now expects the topline contribution from manufacturing to rise from 23% currently to 40% by FY28, while MRO (maintenance, repair, and overhaul) share drops to 54% from 70%.'The market has priced in the resolution of the F404 engine issue and expects a 24% sales CAGR FY25-28E,' UBS noted, adding that HAL's manufacturing ramp-up, strong margin guidance, and expanded capacity across its LCA and helicopter factories are already factored into the stock brokerage said HAL's recently commissioned Tumkuru helicopter factory and expansion at its Bangalore and Nashik units will support a shift in the company's revenue mix toward manufacturing. However, it cautioned that 'a slower ramp in the manufacturing topline is the major downside risk to our Neutral rating.'UBS said it valued HAL at 35x 12-month forward earnings in its base case, reflecting strong growth visibility but limited near-term upside. 'We forecast order inflow of Rs 2.2 trillion over FY26-28 with a revenue CAGR of 21.5% for FY25-28E,' the brokerage brokerage projects average EBITDA margins of 28.6% over FY25-28E and net income growth at a CAGR of 12% in the same period. In the bullish scenario, net income could grow at 18.9%, while the bearish case sees a modest 5% noted HAL's strong positioning in India's expanding defence manufacturing landscape, driven by localisation efforts and growing domestic capex. However, it flagged risks such as delays in order finalisations, GDP-linked budget constraints, and execution bottlenecks in the private supply these risks, UBS acknowledged that HAL could still benefit from a faster-than-expected rollout of large defence contracts. 'Risk to current share price is skewed to the upside,' UBS said.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
