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Hindustan Aeronautics Limited to Launch IPO -Should you Subscribe?

Hindustan Aeronautics Limited (HAL)the largest defence public sector undertaking (PSU) in the country, launches Rs 4000 Cr IPO on March 16, 2018.HAL’s IPO is a part of the Union government’s divestment plan to sell government stakes in several central public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.

Hindustan Aeronautics Limited (HAL) is Bengaluru based Defence Public Sector Undertakings Company, incorporated in the year 1963. The company is engaged in the design, development, manufacture, repair, overhaul and upgrade and servicing of a wide range of defence products which includes, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. It is a ‘Navratna’ company since June 2007. It is also the largest DPSU and 39th largest aerospace company in the world in terms of revenue.

The company has 20 production divisions and 11 R&D centres located across India. Although Indian Defence Services is the main customer of HAL and account for over 93% of sales, it also sell its products and provide services to state governments, para-military forces and corporate.

After analysing company’s financial performance, we believe, this is the first opportunities for investor to invest in truly integrated public sector Defence Company.

With sound financial performance we recommend investor to subscribe the issue with a medium to long term view. However we are not expecting much listing gains so those who apply only for listing gains can avoid this IPO.

IPO DETAILS:

Promoters: President of India, Acting Through Defence Ministry

Issue Open: Mar 16, 2018 – Mar 20, 2018

Issue Size: 36,150,000 Equity Shares of Rs 10 aggregating up to Rs 4,482.60 Cr

Face Value: Rs 10 Per Equity Share

Issue Price: Rs 1215 – Rs 1240 Per Equity Share. With a discount of 25rs per share to Retail investors

Minimum Order Quantity: 12 Shares and multiple of 12.