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State-run defence firm Bharat Dynamics seeks $1.21 bn valuation via IPO
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Government-owned defence equipment manufacturer Bharat Dynamics Ltd is seeking Rs 7,844. 43 crore ($1.21 billion) in valuation through its initial public offering, beginning next week.

The Hyderabad-based public sector unit has fixed a price band of Rs 413-428 per share for the Rs 960.94-crore IPO at the upper end of the band, the company said on Wednesday.

The three-day public issue, which opens on 13 March, will be entirely a secondary market sale. The government, acting as the promoter, will sell 22.45 million shares, or dilute a 12.25% stake in the company, on a post-issue basis.

From the date of listing, Bharat Dynamics will get three years to bring its promoter stake down to 75%, or lower, to meet the Securities and Exchange Board of India norms on minimum public floats.

Bharat Dynamics had filed its draft prospectus with SEBI on 22 January. It received regulatory clearance on 15 February.

The company is the latest among PSU defence and defence-related companies to opt for the capital markets route. Hindustan Aeronautics Ltd had filed its draft proposal with SEBI in October 2017 after moving back and forth on its plans for five years. It had received regulatory nod for its IPO later that month.

Another state-owned firm, Mishra Dhatu Nigam Ltd (Midhani) had filed for an IPO in January and received SEBI nod a month later. The company makes special steel and superalloy products, besides being the only manufacturer of titanium alloys in India. It caters to defence, aerospace, power generation, nuclear and other general engineering industries.

PSU offerings are part of the government’s record disinvestment target of Rs 80,000 crore for the next financial year.

The government has raised Rs 92,476 crore through disinvestment in the current fiscal year so far, higher than the Rs 72,500 crore target. However, more than one-third of that amount, or Rs 36,9015 crore, came from the stake sale in state-run refiner Hindustan Petroleum Corp Ltd to state-run explorer Oil and Natural Gas Corp.

Bharat Dynamics was incorporated in 1970. It is engaged in making surface-to-air missiles (SAMs), anti-tank guided missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment.

It is the sole manufacturer for SAMs in India, torpedoes and ATGMs. The company is the sole supplier of SAMs and ATGMs to the Indian armed forces. It is also engaged in the business of refurbishment and life extension of missiles manufactured.

The company operates three manufacturing facilities located in Hyderabad, Bhanur and Visakhapatnam. It is setting up two more manufacturing facilities at Ibrahimpatnam (near Hyderabad) and Amravati in Maharashtra. The proposed units will be used to manufacture SAMs and very-short-range air defence missiles (VSHORADMs), respectively.

The company had an order book of Rs 11,164 crore as on 31 October 2017.

SBI Capital Markets, IDBI Capital Markets and Securities, and Yes Securities are merchant bankers managing the IPO.

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