Government Plans To Divest Up To 15% Stake In HAL Via Offer For Sale
The Government of India plans to sell up to 15% of its stake in the country’s largest aeronautical company, coinciding with its divestment drive in state-run enterprises.
As many as 3.34 crore shares of Hindustan Aeronautics Ltd., amounting to 10% stake, will be sold through an offer for sale, according to an exchange filing. The floor price for the sale has been fixed at Rs 1,001 apiece—a discount of about 15% to its current market price.
There’s an option for oversubscription for an additional 1.67 crore shares—or 5% stake. If the offer gets oversubscribed, then the government’s stake in HAL will fall from 89.97% to 74.47%.
The offer will open to non-retail and retail investors on Aug. 27 and Aug. 28, respectively. If the offer gets fully subscribed, the government would raise around Rs 3,347 crore. An oversubscription would result in the government netting nearly Rs 5,020.8 crore.
The announcement also comes at a time when the government is looking at local defence companies to ramp up capacities for indigenous fighter jets.
HAL has an orderbook of Rs 53,000 crore and anticipates new orders for 83 light-combat aircraft and 15 light-combat helicopters in the near term, according to its exchange filings.
According to a report by ICICI Direct, HAL has strong R&D capabilities, resulting in more indigenously designed and developed platforms to offer more products in the domestic and export markets. It’s poised to gain in the long run from government’s “Make in India” measures.
HAL shares have risen nearly 61% so far this year while Nifty 500 Index has fallen 3%.