HAL, IRCTC decline up to 4% on report govt mulls stake sale via OFS

According to media reports, the government is looking to sell 5% stake in HAL, while quantum of stake sale for IRCTC will be decided later

Shares of state-owned IRCTC (Indian Railway Catering and Tourism Corporation) and Hindustan Aeronautics (HAL) skid up to 4 per cent on the BSE on Thursday on report that the government is mulling selling stake in both these firms via offer for sale (OFS) to meet its divestment target.

Individually, HAL shares slipped 3.7 per cent to quote at Rs 1,215 per share on the BSE in the intra-day trade. At 9:47 am, the stock was 2.5 per cent lower at Rs 1,230 apiece, as against 0.76 per cent decline in the benchmark S&P BSE Sensex.

According to media reports, the government is likely to sell around 5 per cent of its stake in the aerospace and defence company within this month. At the end of June 2020 quarter, the government held 89.97 per cent in the company, shareholding pattern shows.

"Originally, the plan was to divest 15 per cent holding. Besides, the process to divest part of government’s stake was initiated in January this year. But the process could not be completed due to market conditions and then the spread of Covid-19," said a reprot by The Hindu Businessline.

So far in the month of August, the stock has rallied 44.66 per cent till Wednesday, as against 2.6 per cent gain in the benchmark Sensex, BSE data shows. The rally in the aerospace stock came on the back of the government's 'Make in India' push in the defence sector. Recently, the Ministry of Defence approved the acquisition of 'Make in India' equipment worth Rs 8,722 crore. Of this, bulk of which will go towards purchasing the first fixed wing aircraft that HAL has designed and developed in decades.

That apart, on August 9, MoD had announced a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative.

As regards IRCTC, the catering and tourism-arm of Indian railways slipped 2.3 per cent to Rs 1,330.4 per share in the intra-day trade on the BSE. As per reports, the department of investment and public asset management (Dipam) has invited bids from merchant bankers and brokers to divest part of the government's shareholding of 87.4% in the central public sector enterprise.

"Bids have been sought between September 4 and 10 and they will be opened on September 11. A pre-bid meeting will be held on September 3. The government is also considering allotting shares to eligible and willing employees of IRCTC at a discount to the issue, or discovered price (lowest cut off price), subsequent to completion of the OFS," said a report by The Economic Times.

The percentage and extent shall be decided in due course, the report added.