India has planned to sell a 15% stake in the state-owned aerospace and defense manufacturer Hindustan Aeronautics Limited (HAL) to raise funds worth about INR 5,000 crore, through an OFS (offer for sale).
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The base price of the share was set at INR 1,001 per share, and OFS took place on 27-28 August in separate windows, reported HAL.
According to the Economic Times, the government proposes to sell 3,34,38,750 equity shares through OFS, constituting a 10 percent paid-up share capital of the company, with an option to sell an additional 5 percent stake or 1,67,19,375 equity shares (oversubscription option), HAL said in a regulatory filing.
The Government of India holds 89.97% stake in the company, which was listed in March 2018. The new OFS will provide shares at a 15% discount from Wednesday’s closing price of Rs. 1,177.75.
As per the sources, 20% of the offered size would be reserved for retail investors and would be allocated offer shares at a discount of 5% to the cut-off price in accordance with the OFS guidelines.
HAL’s industry machine has been seeing constant orders and generation of revenues, despite the COVID-19 pandemic. Its strong results for the year have been attributed to the constant development and trials of the products, along with a surge in the indigenisation drive of the armed forces and the government.
Its main customers being the defense sector, much of its orders have had a negligible impact of the pandemic. The company looks forward to new orders for its Light Combat helicopter and the LCA Tejas Mk-1A, the upgraded variant of the LCA Mk-1 by the year-end.
According to the filings, HAL’s total revenue in 2019/20 was INR214.4 billion (USD2.8 billion) and its net profit was INR28.3 billion. These figures represent year-on-year increases of 7.1% and 20.7% respectively. The value of HAL’s assets at the end of the fiscal year was INR532 billion, reported Janes.
A 10% stake was also sold as Initial Public Offering (IPO) in 2018 when the company was listed. The share price slumped to INR 1,006.00 by 1307 hours on August 28, 2020.