Hindustan Aeronautics tanks over 11% as government plans to sell 15% stake

Shares of Hindustan Aeronautics (HAL), the state-owned aerospace and defence company, tanked over 11 per cent on the BSE on Thursday, a day after the company informed that the government plans to sell as much as 15 per cent stake in the company through a public offering of shares.

The government will sell a stake of about 10 per cent, with an option to sell a further 5 per cent in the company, according to a stock exchange filing on Wednesday.

At a floor price of Rs 1,001 a share, the sale could fetch as much as Rs 5,020 crore ($680 million). Retail investors will get a 5 per cent discount on the offer price. The floor price is at a discount of almost 15 per cent to HAL’s closing price of Rs 1,177.80 on Wednesday. READ MORE
 

At 09:27 AM, the stock was trading nearly 10 per cent lower at Rs 1,062.70 on the BSE. It hit a low of Rs 1,043.05 in the early deals against Wednesday's close of Rs 1,177.75.  HAL shares had hit a 52-week high of Rs 1,423.55 on August 14, 2020. 

HAL along with other defence-related stocks have been in focus at the bourses recently after the Ministry of Defence, on August 9, 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.  

The stock of HAL has climbed 24 per cent between August 8 and August 26, BSE data shows.

For the quarter ended March 2020, HAL's revenue increased 0.8 per cent year-on-year (YoY) to Rs 10,239 crore from Rs 10,149 crore in the year-ago quarter. Net profit for the quarter fell by 1 per cent YoY to Rs 1,226 crore from Rs 1,238.9 crore in Q4FY19. READ MORE

On the operational front, HAL's earnings before interest, tax, depreciation, and amortisation (Ebitda) came in at Rs 2,470.8 crore as compared to Rs 2,599.6 crore in the year-ago period. Ebitda margins contracted 150 basis points (bps) to 24.1 per cent.