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State-Owned Defence Firm Mishra Dhatu Nigam Looks To Raise Rs 438 Crore Via IPO

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Mishra Dhatu Nigam Ltd. will be the third state-owned defence company to go public this year as it looks to raise Rs 438 crore through an IPO that opens on March 21.

The price band of the three-day initial public offering has been fixed at Rs 87-90 per share, according to information from the red herring prospectus. A pure offer for sale, the IPO would see government diluting up to 26 percent stake at the upper end of the price band.

This is part of government’s divestment plan this year, through which it plans to raise Rs 80,000 crore through disinvestment and strategic sale of public sector undertakings. The government plans to list eight PSUs this year, which includes five defence companies. Three defence IPOs in March — Bharat Dynamics Ltd., Hindustan Aeronautics Ltd. (HAL) and Mishra Dhatu Nigam — will together look to raise up to Rs 5,596 crore.

Also Read: HAL IPO: Maker Of Sukhoi Is Betting Its Future On Light Combat Aircraft For Sustained Growth

Incorporated in 1973, MIDHANI manufactures special steels, superalloys and titanium alloys for public-sector defence and space companies. The company now also plans to start exports and supply to the commercial sector.

“We started exporting to a Spanish oil and gas company this year,” said Dinesh Kumar Likhi, chairman and managing director of the company. Export order will contribute one percent of the company’s sales in 2018-19 and this could go up to 5 percent in 2-3 years, he added.

The offer will be available at a Rs 3 discount per share to retail shareholders and eligible employees. Bids can be applied for a minimum of 150 shares and its multiples. The IPO is being managed by SBI Capital Markets Ltd. and IDBI Capital Markets and Securities Ltd.

Financial Highlights

  • Revenue stood at Rs 833 crore as of March 31, 2017, growing at an annualised rate of 9 percent for past 5 years.
  • Net profit stood at Rs 126 crore, growing at an annualised rate of 8 percent for past 5 years.
  • Earnings before interest, tax, depreciation and amortization rose 22 percent to Rs 185 crore over last year. Margins improved 310 basis points to 22.9 percent during the same period.
  • Net worth stood at Rs 704 crore as of March 31, 2017, up from Rs 620 crore in past year.
  • Order book worth Rs 517 crore as of Januray 2018. Out of this, more than half of the orders are from defence sector and nearly 33 percent are for space.

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