Bharat Dynamics drops as OFS begins

Bharat Dynamics slumped 12.98% to Rs 334.60 as the offer for sale (OFS) opened for non-retail investors today.

Through the OFS, the Government of India proposes to sell 1,83,28,125 equity shares, constituting 10% paid-up share capital of the company, with an option to sell an additional 91,64,063 equity shares or 5% stake (oversubscription option).

The President of India, acting through and represented by the Department of Defence Production, Ministry of Defence, Government of India, is the promoter of Bharat Dynamics. The floor price for the OFS was set at Rs 330 each, a 14.17% discount to Bharat Dynamics' closing price of Rs 384.50 on Monday, 7 September 2020.

The OFS opened on Tuesday (8 September) for non-retail investors, while both retail as well as non-retail investors will be able to subscribe on Wednesday (9 September). Retail Investors will be allocated equity shares to the offer at a discount of Rs 20 to their respective bid price (including Cut-Off Price) in accordance with the SEBI OFS Circulars.

As on 12:05 IST, the OFS received subscription for 1,66,12,582 shares or 106.64% against the base non-retail offer size of 1,55,78,906 shares.

On a standalone basis, Bharat Dynamics reported net loss of Rs 78.04 crore in Q1 June 2020 as compared to a net profit of Rs 65.55 crore in Q1 June 2019. Net sales slumped 97.7% to Rs 9.77 crore in Q1 June 2020 over Q1 June 2019.

Bharat Dynamics manufactures defense equipment. The company offers ammunitions, counter measures dispensing, infra red interference indicators, and missile systems. It serves military and aerospace industries in India. As on 30 June 2020, the Government of India held 87.75% stake in the company.

On the technical front, the stock's RSI (relative strength index) stood at 30.412. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

The stock was trading between its 50-day moving average (DMA) placed at 402.44 and its 200-day moving average (DMA) placed at 296.53.

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