Reblog: IPO Review Hindustan Aeronautics Ltd.

IPO Snapshot:

Hindustan Aeronautics is entering the primary market on Friday 16th March 2018 with an offer for sale (OFS) of up to 3.41 crore equity shares of Rs. 10 each by Government of India, in the price band of Rs.1,215 to Rs. 1,240 per share, with Rs. 25 per share retail and employee discount. Representing 10.2% of the post issue paid-up share capital, Government is expected to rake in Rs. 4,200 crore at the upper end of the price band. The issue is closing on Tuesday 20th March and listing is likely on 28thMarch.

Company Overview:

India’s largest defence PSU and world’s 39th largest aerospace, Navratna company Hindustan Aeronautics designs, develops, manufactures and maintains aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures, including military aircrafts, such as MiG-21, MiG-27, Hawk Mk 132 and Su-30MKI. Over 90% of company’s Rs. 18,000 crore revenue is derived from Indian Defence Services, while exports account for about 3%. Business operations are divided into five verticals (Bangalore, MiG, Helicopter, Accessories and Design) comprising 20 production divisions and 11 R&D centres located across India, in addition to establishing 13 commercial JVs with American, Russian, Israeli and Canadian counterparts. Relying on both indigenous research as well as technology transfer and licence agreements with third parties, company spends ~7% of revenue annually towards R&D. Its Rs. 68,461 crore order book, as of 31-12-17, representing 4x annual topline, is also very encouraging.

Continue Reading