India's Top Aerospace Stocks

Global aircraft manufacturing giant Boeing is in an unprecedented crisis. The company received orders for only 4 new planes in May.

Boeing's orderbook has almost dried up for its once best-selling 737 Max. This is a fallout of the incident in January 2024 when the side panel of an aircraft blew out mid-air, during a flight.

The crisis, however, is not entirely unexpected.

Boeing's factory workforce has undergone a dramatic transformation in recent years. Squads of senior technicians retired when the pandemic hit and in the years since.

The company, meanwhile, was racing to meet demand for new jets. Especially as air travel resumed and several airline companies, including Indian ones, placed orders for thousands of new aircrafts.

Boeing has been on a hiring spree to replenish its ranks. But the factories are now populated with young employees, with little or no experience related to building airplanes.

Their hurried induction has hardly prepared the employees to meet Boeing's production challenge.

Meanwhile, India is set to become the world's third-largest air passenger market by 2030, after China and the US, as per the International Air Transport Association (IATA).

The aviation market, estimated at US$ 13.5 bn in 2024, is projected to reach US$ 23.2 bn by 2029, implying a compounded annual growth rate (CAGR) of 11.4%.

No nation in the world is buying as many aeroplanes as India.

Indian airlines such as Indigo (Interglobe Aviation), Air India, and Akasa Air have nearly 1,700 aircraft on order from Airbus and Boeing. Also, this number is expected to rise to around 2,000 by March 2025, according to aviation consultancy firm CAPA.

To capitalise on the growing order books, Indian aerospace manufacturers are seeking government support through policy initiatives.

In return for the massive orders to the airline manufacturing giants, the government has proposed they set up factories in India to cater to their global supply chain.

These measures could streamline manufacturing processes, incentivise research and enhance skill development in the sector.

By leveraging these opportunities, India can cater to its burgeoning aviation market and emerge as a significant player in the global aerospace industry.

Over the past decade, India has rapidly emerged as a major player in the global aerospace industry. So, it can now attract leading aircraft makers to establish manufacturing facilities and integrated supply chains in India.

The country's cost-competitiveness, skilled workforce, and favourable government policies have positioned it as an increasingly vital hub for aerospace production.

Historically, the aerospace industry has been dominated by a handful of countries like the US, France, and the UK. However, rising labour costs and a growing need for diversification have prompted aerospace giants to look for alternative locations.

India, with its large, English-speaking engineering talent pool and significantly lower operating costs, has become an attractive destination.

A substantial boost to the Make in India drive came when Air India placed significant aircraft orders. This led Airbus to express interest in expanding its supplier base in India.

Airbus plans to have 5,000 employees in India by around 2025. Moreover, there could be a significant increase in manufacturing activity, sourcing, and team size if the order book swells. Airbus is also collaborating with the Tata Group to establish a final assembly line for civil helicopters in India.

Boeing too has enhanced its India-based sourcing of components and services to US$ 1.25 bn per year.

The aerospace manufacturing giants have enough reason to bet big on India for the coming decades.

India's aircraft fleet size is set to nearly quadruple by 2041 compared to 2020.

The country is projected to receive over 90% of South Asia's airplane deliveries, requiring over 2,500 new aircraft, while its cargo market is set to expand significantly, with the fleet growing from 15 to 80 airplanes by 2042.

Boeing's 2023 'Pilot and Technician Outlook' also forecasts demand in South Asia for 37,000 pilots and 38,000 maintenance technicians over the next 20 years to meet industry needs, driven primarily by growing demand in India.

Therefore, aerospace manufacturing is a skyrocketing megatrend set to take shape in India over the coming decades. However, only a handful of companies are already tapping into the opportunity.

For instance, Dynamitic Technologies, is a relatively smaller sized company which recently secured a contract from Airbus to manufacture all doors for the A220 aircraft family.

Dynamitic, sees India's large pool of engineers as a major attraction for global manufacturers. The company is also the sole supplier of the flap track beam assembly for the A320 family of aircrafts.

Dynamitic Technologies specialises in precision engineering and manufacturing solutions.

It has a diverse product portfolio, including aerospace structures, systems, and components. The company has earned recognition for its expertise in complex aerostructures and hydraulics, supplying critical components to major global aerospace programs.

Meanwhile, Hindustan Aeronautics is one of the largest and most renowned aircraft manufacturing companies in India. With a rich history spanning over seven decades, HAL has been instrumental in the design, development, and production of various aircraft, helicopters, and aero engines.

The company's notable achievements include the production of indigenous aircraft like the Tejas Light Combat Aircraft (LCA) and the Advanced Light Helicopter (ALH). HAL's expertise extends to aircraft upgrades, overhaul services, and the manufacture of aero structures, avionics, and other critical components.

Three unlisted companies to watch out for are Tata Advanced Systems (TASL), Mahindra Aerospace, and Aeronautical Development Agency.

TASL, a subsidiary of Tata Sons, has successfully delivered critical aerospace components and systems, including fuselages, wings, aero structures, and avionics for various international programs.

Mahindra Aerospace, part of the Mahindra Group, has rapidly established itself as a key player in the aerospace manufacturing sector.

The company's portfolio includes the design, development and production of aircraft, aero structures, and aircraft components. Mahindra Aerospace's achievements include the production of the Airvan series of utility aircraft, which have gained international recognition for their ruggedness, versatility, and cost-effectiveness.

Aeronautical Development Agency (ADA) was set up under DRDO at Bangalore, in 1984 to oversee the development of the nation's Light Combat Aircraft programme.

ADA plays a crucial role in the development of cutting-edge aerospace technologies and platforms in India. It is responsible for the design and development of the indigenous Tejas Light Combat Aircraft (LCA), a multi-role supersonic fighter aircraft.

Thus, so far, there are only a handful of aircraft manufacturing companies and aerospace equipment suppliers in India. Only two of the companies are listed.

As these companies continue to push boundaries and contribute to the global aerospace sector, the future looks promising for India's aerospace manufacturing prowess.

It will not be surprising to see the Tata and Mahindra group aerospace companies getting listed over time, and creating the ecosystem of listed aerospace stocks, exactly the way railway stocks have got listed in recent years.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)