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Aircraft maker Hindustan Aeronautics falls on trading debut

28 March, 2018

State-run aerospace and defence firm Hindustan Aeronautics Ltd (HAL) made a weak stock market debut on Wednesday, with its shares listing at a discount to the issue price.

Shares of HAL began trading on the BSE at Rs 1,169 apiece compared with the public offering price of Rs 1,215 apiece, stock exchange data showed. The stock touched a low of Rs 1,117.60 before closing at Rs 1,128.35, down 7.1%.

The BSE’s 30-stock benchmark Sensex ended down 0.62% on Wednesday.

The weak start follows an IPO that sailed through only with support from stater-run Life Insurance Corporation of India. LIC likely bid roughly 60% of the total Rs 4,229 crore issue size.

The company now commands a market capitalisation of Rs 37,730 crore. It had sought a valuation of as much as Rs 41,464 crore through the IPO.

HAL is the ninth company to list on the main board of the bourses in 2018. Five of the previous eight had gained on debut.

HAL had filed its draft prospectus in October 2017 and got regulatory clearance the same month. Merchant bankers SBI Capital Markets and Axis Capital managed the IPO.

At the time of filing for the IPO in October 2017, the government had decided to sell 36.15 million shares. However, the company bought back 27.11 million shares from the government two months later.

After this buyback, the company’s paid-up capital reduced from 361.5 million to 334.38 million. As a result, the size of the offering shrunk from 36.15 million to 34.10 million shares.

HAL will be the only Indian aircraft maker listed on the stock exchanges. However, a number of other companies that make defence equipment are already listed. These include Bharat Electronics Ltd, Reliance Naval (formerly Reliance Defence Engineering), Tata Power, Mahindra & Mahindra, Larsen & Toubro and Cyient.

HAL’s listed global peers include US firm The Boeing Co., European multinational corporation Airbus SE, Lockheed Martin, United Technologies and General Electric.

Bengaluru-based HAL was incorporated in 1963. It designs, develops, manufactures, repairs, overhauls and services a wide range of products including aircraft, helicopters, aircraft engines, avionics, accessories and aerospace structures.

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Aircraft maker Hindustan Aeronautics falls on trading debut

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