Niti Post
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March 23, 2023
The Indian government has announced plans to sell up to 3.5% stake in Hindustan Aeronautics Ltd (HAL), a public sector aerospace and defence company, as part of its disinvestment programme. The stake sale, valued at Rs 2,867 crore, will help the government achieve the minimum public shareholding of the company in compliance with Securities and Exchange Board of India’s (SEBI) listing obligations.
The Offer for Sale (OFS) is expected to take place on March 23 and March 24, with an option to sell an additional 1.75% stake if oversubscribed. The offer size has reserved 10% for retail investors, meaning individual investors who place bids for shares of total value of not more than Rs 2,00,000.
Floor Price and Previous Stake Sale
The stake sale’s floor price is set at Rs 2,450 apiece, which is at a discount to its current closing price of Rs 2625.20. The Indian government holds 75.15% stake in HAL, and the previous stake sale was in 2020 when the government had sold a 15% stake, raising Rs 5,000 crore through OFS, which received a strong response from investors.
Impact on Hindustan Aeronautics Ltd
HAL is one of India’s largest defence public sector undertakings, and the stake sale is unlikely to impact the company’s operations or future growth plans. However, it will help the government raise funds for its infrastructure-building projects.
Divestment Target and Future Plans
The government has a target of raising Rs 1.75 lakh crore from disinvestment in the current financial year, out of which it has raised Rs 31,100 crore by selling its shares in state-run firms.
The Indian government’s plan to sell its stake in HAL is a step towards achieving its disinvestment targets and improving public shareholding in the company. The stake sale is unlikely to impact HAL’s operations, and the company’s future growth plans remain unaffected. The success of the stake sale remains to be seen, but it will undoubtedly help the government raise funds for its infrastructure projects.
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