Hindustan Aeronautics tumbles 6% on pricing OFS at discount

The government will be offloading 3.5 per cent stake in HAL through an Offer for Sale at Rs 2,450 per share from March 23 - 24, 2023.

Shares of Hindustan Aeronautics (HAL) tumbled 6 per cent to Rs 2,475 in intra-day trades on Thursday after the government priced the Offer for Sale (OFS) at a discount of Wednesday's closing price.

The government on Wednesday announced its plan to sell up to 3.5 per cent stake in the aerospace and defence company through an OFS to raise over Rs 2,867 crore. The Centre owns up to 75 per cent stake in HAL.

The 3.5 per cent stake sale comprised 1.75 per cent as the base offer and 1.75 per cent set as an additional option. The offer will open from March 23 to March 24, 2023. The floor price for the OFS was set at Rs 2,450 per equity share, which was at a 6.7 per cent discount to the last closing price.

At 09:25 AM, the stock traded 5.4 per cent lower at Rs 2,483 with trades of around 46,000 shares so far on the BSE. Meanwhile, the S&P BSE Sensex was down 0.5 per cent at 57,943.

Back in 2020, the government had sold 15 percent of its equity stake in the company at Rs 1,001 per share to raise about Rs 5,000 crore via OFS. READ MORE

HAL is engaged in carrying out design, development, manufacture, repair and overhaul of aircraft, helicopter, engines and related systems like avionics, instruments and accessories primarily serving Indian defence programme. 

Earlier this month, the Union Cabinet on March 01, 2023 had approved the procurement of 70 Hindustan Turbo Trainer-40 (HTT-40) trainer aircraft from HAL at a cost of over Rs 6,800 crore. The aircraft will be supplied over a period of six years. 

For the quarter ended December 2022, the company had reported a 23 per cent jump in net profit at Rs 115.40 crore when compared with Rs 93.76 crore in Q3FY21. Total income was up 1.2 per cent Year-on-Year at Rs 616.28 per cent from Rs 608.85 crore.

Technical View

Bias: Negative

Target: Rs 2,366

Support: Rs 2,475

Resistance: Rs 2,566, Rs 2,588, Rs 2,695

After having sustained above the 20-DMA (Daily Moving Average) for more than a month, HAL in the last four trading sessions has once again slipped below the short-term moving average. 

Presently, the stock is trading below the 20-, 50- and 100-DMAs placed at Rs 2,695, Rs 2,566 and Rs 2,588, respectively. Hence, the near-term bias is likely to remain negative as long as the stock fails to conquer these hurdles.

On the downside, the daily chart indicates that the stock has near support around its lower-end of the Bollinger Bands at Rs 2,475, below which the stock can test its 200-DMA placed at Rs 2,366-odd level.

(With inputs from Rex Cano)