Here is why Hindustan Aeronautics share price plunged 6% on Wednesday; check details

Shares of India’s leading aircraft manufacturer, Hindustan Aeronautics Ltd, plunged over 6% on Wednesday morning after shares finished 3% higher on Tuesday amid broad base rally. The defence contractor is also in focus today after a report from the Economic Times cited that the company is out of the race of bidders for the Advanced Multirole Combat Aircraft.

Following a lower-than-expected budget expenditure on the capex for defence, the latest report further soured the investor sentiment for the largest defence contractor. HAL shares are trading 4% lower on a YTD basis and delivered 12.5% returns in the past 12 months.

What is the AMCA? (Advanced Multirole Combat Aircraft)

The advanced aircraft is fifth generation, stealth, twin engine, multirole fighter jet which is designed by Indian Airforce and Navy and developed by Aeronautical Development Agencey (ADA). Initially, the aircraft will include the General Electric’s F414 engines, which are currently used in Tejas Mk2 fighter jets. Later the plans are for to introduce indegenously developed 110-125 Kn engines. The programme is developed to manufacture 120+ jets via public-private partnerships. The aircrafts will be AI enabled avionics with supercruise capabilities and internally stored weapons.

The Indian Cabinet Comittee on Security (CCS) approved roughly ₹15,000 crore in March 2024 for designing and developing five prototypes of AMCA. While the total project outlay for 120+ jets is expected to be around ₹1.2 lakh crore with production initiation by 2030.

Who are probable bidders?

According to the latest media reports, seven players participated in the competition to be selected for designing and developing five AMCA with ADA (Aeronautical Development Agency). These included, Adani Defence, Mahindra Defence, HAL, Tata Advanced Systems, L&T and Bharat Forge. Out of these, the media reports said, Tata Advanced Systems, Bharat Forge and L&T are selected for the further stage. The final bidder will be shortlisted in coming months to develop aircrafts with ADA.

Why HAL is probably excluded?

Hindustan Aerounatics Ltd is India’s largest defence company by order book crossing over ₹2 lakh crore. The company received another light combat aircraft order from the Ministry of Defence worth ₹62,000 crore in September 2025 for 97 Mk-1A aircrafts. Despite the large order book, the company continues to face structural challenges in delivering the orders on time. Hindustan Aeronautics Ltd currently holds orders for nearly 300 aircrafts with orders given as early as 2006 and 2011. The company started delivering those orders in early 2024, almost a decade later than the initial delivery dates.

The slower execution of orders was led by multiple factors, like delay in delivery of General Electric engines. The order for 99 F404 engines for Tejas Mk1A was delayed aggressively with only 3 engines delivered in 2025. HAL signed another order for 113 more F404 for 97 more aircrafts with expected delivery timeline of 2027-2032.

Considering the pending large orderbook and slower execution of the existing ones could be one of the probable reasons for HAL to be kept out of the race for AMCA. Last year, Air Chief Marshal sounded annoyed with HAL’s delay in delivery and expressed his disappointment by saying that he is not confident with HAL and thats not a good thing to happen.