The government is selling up to 3.5% stake in HAL through an OFS to raise around ₹2,867 crore. The government has set a floor price of ₹2,450 a share. The OFS will be open for retail investors on Friday, March 24. About 10% of the offer size is reserved for retail investors, subject to the receipt of valid bids.
With a strong return on equity (ROE) track record of over 25% in the past three years, the stock is currently trading at 16.23 times one-year forward PE. The company has been maintaining a healthy dividend payout of 32%.
HAL has a healthy order book position of ₹8,4000 crore, which is 3.2 times its trailing 12-month revenues. It has large-scale orders to make aircraft and helicopters.
Agencies“The kind of order book that HAL has, our sense is that this is one company which is going to play a very important and a crucial role as far as Make-in-India is concerned,” said Gaurang Shah, senior vice president, Geojit Financial Services. “We continue to maintain a buy with a long-term point of view keeping in mind the foreign direct investment in defence.”
The non-retail portion of HAL OFS opened on Thursday and was subscribed 3.74 times with an indicative price of ₹2,468.98. Retail investors can subscribe to the offer above this price. According to Bloomberg consensus estimates, the stock could rally 28% in a year. The 10 broking firms that track this counter have given a target price of ₹3,196.
