This post on Hindustan Aeronautics Limited IPO tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Hindustan Aeronautics Limited IPO or not.
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Hindustan Aeronautics Limited IPO: Grey Market Premium etc.
12/03/18 Grey Market Premium Rs. NIL
Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Hindustan Aeronautics Limited IPO .
Angel Broking: “Hindustan Aeronautics Limited (HAL) is the largest defence public sector undertakings (DPSU) in terms of value of production in FY2017. HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. Outlook & Valuation: At the upper end of the price band, the P/E multiple works out be 15.8x (current equity base) of FY17 EPS. We expect HAL to maintain a healthy growth trajectory in the coming few years, considering its robust order book, opportunity in the defence space. It is also a good dividend play with over 30% of the yearly earnings mandated to be paid as dividend. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period.“
Capital Market: ” Score 43/100, At higher price band of Rs 428, the P/E on FY 17 EPS (on current diluted equity of Rs 183.28 crore) of Rs 26.8 works out to 16. There are no listed players engaged in the manufacturing of missiles in India. Due to the nature of its business, there can be volatility in quarterly earnings and it has to maintain secrecy about its plans at the cost of investor friendliness, which may affect the P/E that it can command.”
Choice Broking:“ At the higher price band of Rs. 1,240 per share, HAL’s share is valued at a P/E multiple of 15.8x (to its restated FY17 EPS of Rs. 78.5), which is at a
discount to its peer average of 21x. Recommend Subscribe.”
GEPL Capital: “Hindustan Aeronautics Limited (HAL) stands to gain from operating leverage. At a P/E of 17x of FY17 EPS, We believe that HAL demands a discount and we believe it as undervalued. We assign a Subscribe rating to the IPO.
LKP Securities: ” On valuation front, if we value it on FY17 EPS of ₹73, then the stock looks attractive at P/E of 17x. Given the entry barrier in this business and HAL being a close proxy to the Indian defense story, the IPO can be subscribed for some listing gains and for the long term.“
SPA Securities: “The revenue/EBITDA/PAT of HAL has grown at a CAGR of 6.1%/
5.5%/4.6% from FY15 to FY17. EBITDA margin remained flat in the same period. The company has an order book of ~INR 684 bn which imparts revenue visibility for four years. ROE has improved from 14.3% in FY15 to 22.3% in FY17 on the back of improved utilization and better working capital management. At higher price band, the offer is valued at 17.1x its FY17 earning. HAL’s dominant position as a Government owned enterprise, strong order book, robust return ratios and superior balance sheet are key positives. While opportunity size is huge, order inflow could be bumpy, given
the nature of the defence industry. Thus considering the above observations, we recommend to “SUBSCRIBE” the issue with a longer term perspective.”
SMC : “Rating 3/5 The company has a sustained track record of profitability and paid dividends every year for over four decades. As of December 31, 2017, HAL’s order book was ₹68461 crore which generally includes products and services to be manufactured and delivered and excludes anticipated revenues from joint ventures and subsidiaries. The business is cyclical in nature and the company sees strong sales during the third and fourth quarters of each Financial Year. However, this is the first opportunity of an investment in a defence sector PSU Navrathna company, having niche play in aeronautics with a good track record. Investors may consider investment for long term”
SP Tulsiyan website: “Being India’s largest military aircraft and helicopter maker, company’s technological skills and strategic position is unmatched. Sector tailwinds in the form of huge demand from Indian armed forces for military aircrafts and their maintenance results in enormous potential for the company. All this, at an attractive pricing. Subdued secondary market conditions may not yield a pop on listing, but the share can be a good long term bet, as a quality portfolio stock. Hence, one can subscribe to the IPO with a long term view.“
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.