HAL shares plunges 6% on govt’s disinvestment plan

Shares of state-owned Hindustan Aeronautics Ltd (HAL) declined nearly 6% in early trade on Thursday after the government proposed to offload 3.5% stake in the aerospace company through offer for sale (OFS). The government, which owns 89.97% stake in the company, will sell up to 58,51,782 equity shares in HAL, which 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 Wednesday closing price on the Bombay Stock Exchange (BSE).

HAL share price opened 5.1% lower at ₹2,491 against the previous closing price of ₹2,625.20 on the BSE. In the first hour of trade so far, the stock declined as much as 5.7% to hit a low of ₹2,475 on the back of volume trade. As many as 0.91 lakh shares changed hands over the counter on the BSE against the two week average volume of 0.62 lakh stocks, while the market capitalisation slipped to ₹83,260 crore.

In the last one year, HAL shares have delivered a stellar return of 77%, while it has risen just over 2% in the past six months. In the calendar year 2023, the PSU stock has fallen 2%, while it shed nearly 2% in one month. The company, which made its market debut in March 2018, has given 120% returns to its shareholders since its listing. It has declared 9 dividends since its market debut, while it paid equity dividend amounting to ₹50 per share in the past 12 months. At the current share price of ₹2,492.95, dividend yield stands at 2.01%, as per Trendlyne data.

In the quarter ended December 2022, 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 EBITDA margin stood at 17.4%.

Know about HAL OFS:

• The government, which owns 89.97% stake in the company, will sell 3.5% stake in the aerospace company.

• The centre will offload 1.75% of its equity shares of face value of ₹10 each, while it proposes to sell an additional 1.75% stake "in event the oversubscription option is exercised”.

• The issue will open on March 23 and closes on March 24. For non-retail Investors, the issue will open on March 23, while for retail investors and non-retail investors it will open on March 24.

• 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 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.