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The Union Government has initiated the process to offload 5 per cent of its equity in Bharat Electronics (BEL). This company is a Central Public Sector Enterprise (CPSE) under Defence Ministry.
Share prices of BEL saw a good rally intraday on Tuesday before closing at ₹107.05, up 4.13 per cent. At the current market price, the stake sale could fetch around ₹1,300 crore to the exchequer.
As of June end, the Government of India holds 66.01 per cent stake.
BEL was the first defence PSU to be listed on the stock exchanges almost three decades back. The company, set up in 1954, is an R&D/ technology-driven company operating in the competitive Defence electronics arena.
The Department of Investment and Public Asset Management (DIPAM) has invited request for proposal (RFP) to engage merchant bankers and selling brokers for the stake sale.
Shares to employees
The shares are to be sold through the offer-for-sale (OFS) route, better known as auction method. The Centre is also considering allotting shares to eligible and willing employees of BEL at a discount to the issue/ discovered price (lowest cut-off price) up to a maximum of a certain percentage of the OFS size subsequent to completion of the transaction under OFS.
In February 2017, the Centre had offloaded 5 per cent stake (or 89.34 lakh shares) at ₹1,499 a share (pre-stock split and bonus) and raised ₹1,600 crore. In September 2017, the company had announced a stock split (face value from ₹10 to ₹1) and also one bonus share for every 10 held (1:10).
Earlier this year, Bharat Electronics had bought back 2.03 crore shares at ₹182.5, spending ₹372.25 crore.
Among its major public shareholders are foreign portfolio investors (6.05 per cent), LIC (3.61 per cent), Bharat-22 ETF (2.41 per cent), HDFC Hybrid Equity Fund (1.88 per cent) and SBI Blue Chip Fund (1.24 per cent).
Small retail investors (2.39 lakh) hold 5.27 per cent stake, while 18 high net worth individuals own 0.31 per cent in BEL.
R&D is the main focus area of the company. The total expenditure on R&D as a percentage of turnover during the year was 9.36 per cent, which is one of the highest among defence PSUs. Defence, being the mainstay of the company, has contributed 82 per cent of sales revenue, with the balance 18 per cent coming from the civilian sector.
The company closed financial year 2017-18 with total income of ₹3,636.36 crore and net profit of ₹558.74 crore.
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