Govt to disinvest up to 3.5% stake in Hindustan Aeronautics for ₹2,867 cr

The central government will sell up to 3.5% stake, or 58,51,782 equity shares, in state-owned Hindustan Aeronautics Ltd (HAL) through an offer for sale (OFS). The share sale will fetch ₹2,867 crore to the exchequer. The floor price for the OFS has been fixed at ₹2,450 per share, a discount of 6.7% to the current market price. On Wednesday, the stock closed 0.93% lower at ₹2,625.20 apiece on the Bombay Stock Exchange (BSE).

The government, which owns 89.97% stake in the company, plans to offload 1.75% of its equity shares of the face value of ₹10 each on March 23-24. Besides, it proposes to sell an additional 1.75% stake "in event the oversubscription option is exercised”. For non-retail investors, the issue will open on March 23, while for retail investors it will open on March 24.

“The government proposes to sell up to 1.75% (58,51,782) equity shares of the face value of ₹10 each of the company, on March 23 (for non-retail investors only) and on March 24 (for retail investors and non-retail investors who choose to carry forward their un-allotted bids with an option to additionally sell 1.75% (58,51,781) equity shares," the company said in a filing today.

As per the exchange filing, 10% of the offer size shall be reserved for retail investors, 5% for employees, and 25% for non-retail investors, including mutual Funds and insurance companies, subject to the receipt of valid bids. “The stock exchanges will decide the quantity of shares eligible to be considered in the retail category, based on the floor price declared by the seller,” it said.

The release said that no discount will be offered to the retail investors, while employees will be eligible to apply for equity shares up to ₹2,00,000.

Recently, the board of the Bengaluru-headquartered aerospace and defence company declared a second interim dividend of ₹20 per equity share of ₹10 each fully paid up 200% for the financial year 2022-23. Besides, the Cabinet Committee on Security (CCS) approved procurement of 70 basic trainer aircrafts from the company for Indian Air Force (IAF) at an estimated cost of ₹6,828.36 crore.

For the October-December quarter of the current fiscal, the state-owned company reported a net profit of ₹1,155.2 crore, up 23.8% year-on-year as against ₹933.4 crore in the year-ago period. However, revenue from operations dropped 3.9% to ₹5,665.5 crore as compared to ₹5,893.8 crore in the corresponding quarter of last year. On the operating front, EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) slipped 31% YoY to ₹985.5 crore in Q3FY23, while the EBITDA margin stood at 17.4%.