Hindustan Aeronautics Ltd.’s slipped 6.76 percent to Rs 1,132 on its debut trade after selling shares at Rs 1,215 in its initial public offering. The stock traded between Rs 1,121 and Rs 1,184 in the session on the National Stock Exchange.
The country’s largest state-owned defence firm’s Rs 4,200-crore initial public offering was subscribed 0.99 times on the final day of bidding, according to data available with the stock exchanges.
The portion reserved for qualified institutional buyers was subscribed 1.73 times the number of shares on offer. The retail portion of the offer was subscribed 0.36 times while the shares set aside for HAL employee was subscribed 0.20 times. Demand from non-institutional investors remained muted with the segment subscribed 0.03 times.
The Navratna company manufactures aircraft, helicopters and aeroengines, and also develops and repairs them. It is the world’s 39th largest firm in the aerospace industry. While it has generated a majority of its revenue from the sale of products, the share of service revenue has been increasing in the last few years.
HAL’s biggest client currently is the Indian Army. It also supplies products overseas to such as Afghanistan, Namibia, Seychelles, Ecuador, Mauritius, Maldives and Nepal.
The net worth is close to Rs 12,944 crore as of Sept 30, 2017, translating to a book value of Rs 387 per share. It had more than Rs 11,600 crore in cash as on that date.
Revenue has been growing at a compounded annual growth rate of 7 percent, while net profit grew at 63 percent over financial years 2015 to 2017. Revenue and net profit stood at Rs 5,173 crore and Rs 391 crore, respectively for the first half year ended September 2017
Earnings before interest, tax and depreciation and amortisation grew at a CAGR of 26 percent, while Ebitda margins expanded by more than 1,200 basis points in the last three years to 18.1 percent. One basis point is one-hundredth of a percentage point.
Ebitda and operating margin stood at Rs 478 crore and 9.2 percent, respectively, for the first half of the year ended September 2017.
Company’s business is cyclical in nature as revenue recognition depends on a certification process which generally takes place in the second half of a financial year when conditions for flight testing are favourable.
HAL is debt-free and has been paying dividend consistently for the last four decades.