The government announced that it will sell up to 3.5 percent of its stake in Hindustan Aeronautics, India's leading aerospace and defence company, through an offer for sale (OFS) to raise more than ₹2,867 crore in the current fiscal. Currently, it holds a 75 percent stake in the company.
Following the announcement, the company's shares fell by 5.6 percent on Thursday, March 23.
The offer for sale is being undertaken for achieving the minimum public shareholding of the company in accordance with the Securities and Exchange Board of India's listing obligations, the company informed through an official filing.
During Thursday’s trade, the stock opened at a price of Rs. 2,493 per share against the previous close of Rs. 2,624.80 per share and declined further during the early trading session to touch an intraday low of Rs. 2,475.10.
It was trading at ₹2,487 apiece, down by 5.25 percent, at 11:15 a.m. on the NSE.
The stock touched a 52-week high of Rs. 2,914 on March 13, 2023, and a 52-week low of Rs. 1,381 on March 28, 2022, indicating that at the current level, the stock is trading over 80 percent above its 52-week low and 14.6 percent below its 52-week high.
The stock has increased nearly 2 percent in the last six months. Moreover, in the past one year, it has gained over 77 percent. Furthermore, the stock has yielded a positive return of nearly 120 percent in the last five years.
The Government of India has announced that it will be offering a 3.5 percent stake in Hindustan Aeronautics Limited (HAL) through an offer for sale (OFS) between March 23 and 24.
The floor price of the OFS is set at ₹2,450 per equity share, which is at a 6.67 percent discount from the current market price of HAL. The OFS will comprise 1.75 percent as the base offer and 1.75 percent as an additional option.
Retail investors will be entitled to 10% of the total offer amount, pending the submission of legally binding bids. Retail investors are defined as an individual who makes bids on shares with a maximum bid of ₹2,000,000.
“The government has proposed to sell 1.75 percent of its equity shares of the face value of ₹10 each on March 23 and March 24 for non-retail investors and an additional 1.75 percent stake “in the event the oversubscription option is exercised,” the official filing stated.
This will be the second stake sale in HAL by the government in the past year, after it sold 15 percent of its equity stake in the company at ₹1,001 per share to raise about ₹5,000 crore via OFS in 2020.
Hindustan Aeronautics is a large-cap company with a market capitalisation of ₹83,278.09 crore engaged in the defence sector. HAL is one of the oldest and largest aerospace and defence manufacturers in the world, its website shows.
According to a MintGenie poll, 8 analysts on an average have a ‘STRONG BUY’ call on the stock.