Hindustan Aeronautics to launch Rs4,000 crore IPO on 16 March

Mumbai: State-owned Hindustan Aeronautics Ltd (HAL) on Tuesday said that it will launch its initial public offering (IPO) on 16 March.

HAL, the largest defence public sector undertaking (PSU) in the country, makes fighter planes such as MiG-21, MiG-27, Jaguar, and Su-30 MkI. It is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of aircraft, helicopters, aero engines, avionics, accessories and aerospace structures.

The company has set a price band of Rs1,215 to Rs1,240 per share for the public offering. The offer will close on 20 March.

The initial share sale is a pure offer for sale of shares by the government of India, which is selling 34.10 million shares or a 10.2% stake in the company. The government stands to get over Rs4,000 crore through the HAL public offering.

SBI Capital Markets Ltd and Axis Capital Ltd are managing the HAL share sale.

HAL’s IPO is part of the Union government’s divestment plan under which the department of investment and public asset management (DIPAM) plans to sell government stakes in several central public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.

Three defence sector PSUs–HAL, missile maker Bharat Dynamics Ltd and metals and alloys producer Mishra Dhatu Nigam—are launching their IPOs this month.

Bharat Dynamics will launch its Rs960 crore IPO on 13 March. It has set a price band of Rs413-428 per share for the IPO. The offer will close on 15 February.

Mishra Dhatu Nigam will announce the price band for its initial share sale on Wednesday. The company’s IPO is expected to be approximately Rs400 crore in size.

The government will fetch around Rs5,500 crore through divesting its stake in these three companies.

In his Union budget speech on 1 February, finance minister Arun Jaitley said that the government is set to overshoot its Rs72,500 crore disinvestment target for 2017-18, and is aiming to garner Rs1 trillion during the year ending 31 March, aided by completion of the acquisition of Hindustan Petroleum Corp. Ltd by Oil and Natural Gas Corp. Ltd for around Rs37,000 crore.

The government has set a disinvestment target of Rs80,000 crore for 2018-19.

HAL’s operations comprise 20 production divisions and 11 research and design centres located across the country.

As of 31 December, HAL’s order book stood at Rs68,461 crore. The order book comprises primarily of orders to manufacture Su-30 MkI and Tejas Light Combat Aircraft (LCA), the company said. Tejas is an indigenously designed and developed fighter aircraft.

“We have an order for 40 Tejas planes from the government, of which seven have been delivered. We have a production capacity of eight planes a year, which we are looking to enhance to 16 planes a year. We are working with the government to procure an order of another batch of Tejas,” said M. Mazhar Ali, executive director, planning and projects, HAL.

For the financial year 2016-17, the company reported a revenue of Rs17,951 crore, as against a revenue of Rs16,758.5 crore in the previous year. In 2016-17, the company reported a profit of Rs2,624.7 crore, as compared to a profit of Rs2,004.3 crore the previous year.livemint