HAL IPO Opens: Ten Things To Know Before You Invest

Hindustan Aeronautics Ltd (HAL) IPO opened on Friday. The public issue will close on March 20. Hindustan Aeronautics (HAL) is a fully-owned Government of India undertaking under the administrative control of Ministry of Defence, Department of Defence Production. The authorised capital of HAL is Rs 600 Crore consisting of 60,00,00,000 equity shares having face value of Rs 10 each. The current programs under progress of the IPO-bound Hindustan Aeornautics are production of SU-30 MKI, Hawk-AJT, Light Combat Aircraft (LCA), DO-228 Aircraft, Dhruv-ALH and Cheetal Helicopters, Repair Overhaul of Jaguar, Kiran MkI/IA/II, Mirage, HS-748, AN-32, MiG 21, Su-30MKI, DO-228 aircraft and ALH, Cheetah / Chetak helicopters. The Company takes up maintenance and overhaul services to cover the life cycle requirement of all the old and new products. Presently, 13 types of aircraft/ helicopters and 17 types of engines are being overhauled. In addition, facilities exist for repair/ overhaul of various accessories and avionics fitted on aircraft of Russian, Western and Indigenous designs.

Here are 10 things to know about the Hindustan Aeronautics (HAL) IPO:

1. Price band for HAL IPO has been fixed at Rs 1,215 to Rs 1,240. The floor price is 121.5 times of the face value and the cap price is 124 times of the face value.

2. The HAL IPO's floor price is quite high. The average cost of acquisition of equity shares is Rs 152 per equity share (after considering the impact of buyback of equity shares in March 2016 and November 2017). Keeping this in mind the price at the upper end of price band is Rs 1,240 per equity share.

3. HAL IPO bids can be made for a minimum of 12 equity shares and in multiples of 12 equity shares thereafter.

4. The Hindustan Aeronautics Ltd (HAL) price equity (P/E) ratio at the lower end of price band is 16.64 while the ratio at the upper end of price band is 16.99

5. The HAL earnings per share (EPS) of fiscal 2017 and fiscal 2016 are Rs 73 and Rs 42.

6. The HAL return on net worth (RoNW) for fiscals 2017 and 2016 are 21 and 18.

7. HAL depends largely on ministry of defence contracts. A decline of funding in the defence budget or delays in the budget process could adversely affect the company's ability to grow or maintain our sales, earnings, and cash flow.

8. HAL operates in the defence sector and is engaged in the design, development and manufacture of aircraft, helicopters, engines and accessories, as well as offering repair and overhaul services and the supply of spares.

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9. The company faces competition from other international companies, many of which have substantially greater resources. The competitors include Lockheed Martin, Saab, Airbus Helicopters, Bell Helicopters, Leonardo, Boeing, BAE Systems and UGMK (LET Kunovice Aircraft Industries).

10. HAL IPO's maximum retail subscription is Rs 2,00,000.