Bharat Dynamics shares crash 13% as Centre launches OFS to divest stake

Rs 900-crore share sale gets bids worth Rs 720 crore from institutional investors; retail portion to be auctioned on Wednesday

The Bharat Dynamics (BDL) stock crashed nearly 13 per cent on Tuesday after the centre launched a share sale to divest 15 per cent stake. The Rs 900-crore offer for sale (OFS) generated demand worth Rs 720 crore from institutional investors. Shares worth Rs 130 crore reserved for retail investors will be auctioned on Wednesday.

The base price for the share sale has been set at Rs 330 per share, a discount of 15 per cent to Monday’s close. The stock on Tuesday ended at Rs 331, down 13.9 per cent, or Rs 53.4, on the BSE.

Retail investors—those applying for up to Rs 200,000 worth of shares—will can technically get the shares at Rs 310 as the centre has announced an additional discount of Rs 20 per share to them.

 

The government currently holds nearly 88 per cent stake in BDL. If the retail portion is fully subscribed the government’s stake will fall below 75 per cent, making BDL complaint with the 25 per cent public shareholding norms.

BDL is the second public sector undertaking (PSU) where the government is offloading stake this fiscal. Last month, it raised Rs 5,000 crore by divesting in Hindustan Aeronautics (HAL). Shares of HAL too had seen a similar drop during the share sale.

Analysts said shares tend to drop during such share sales as investors dump shares in the secondary market and apply cheaper in the OFS.

Both BDL and HAL operate in the defence space. Shares of defence companies have seen huge spurt this fiscal on optimism that their order book will get a boost due to tensions at the border.

Shares of BDL have doubled from its March lows.