Bharat Dynamics IPO Will Fetch Government Up To Rs 960 Crore

The government will raise up to Rs 960 crore by selling 12 percent stake in Bharat Dynamics Ltd. in the three-day initial public offering of the state-run maker of missiles that opens on March 13.

It will sell 2.2 crore shares at Rs 413-428 apiece. A block of 4.5 lakh shares will be reserved for employees, who along with retail investors will get a discount of Rs 10 a share.

SBI Capital Markets Ltd., IDBI Capital Markets & Securities Ltd. and YES Securities (India) Ltd. are the book running lead managers for the offer.

Bharat Dynamics, based in Hyderabad, is the sole manufacturer of surface-to-air and anti-tank guided missiles, launchers, underwater weapons and test equipment. It two facilities in Visakhapatnam and Bhanur. “Two new facilities at Ibrahimpatnam and Amravati will also become operational by 2021,” V Udaya Bhaskar, chairman and managing director, said.

Revenue from operations rose 12 percent year-on-year to Rs 3,419 crore in the year ended March 2017. Profit after tax fell 13 percent to Rs 490 crore during the. Profit margins stood at 9.4 percent as compared to 12.2 percent a year ago.

“We get advances for manufacturing of products, which is being utilised into operations,” said Bhaskar. “That is why the interest income and advances are falling even as the profit from operations is increasing.”

Net cash flows were negative in the year ended March 2017. “As most of our advances are being consumed into operations, there are negative cash flows. This is, however, not a concern as we have Rs 1,600 crore cash available,” said Bhaskar.

Other Highlights

• The company's order book stood at Rs 10,543 crore as of Jan. 31, 2018.
• Earnings before interest taxes depreciation and amortisation improved marginally by 10 percent to Rs 568 crore. EBITDA margin narrowed to 11.8 percent from 12.6 percent.
• Its net worth rose 19.5 percent to Rs 2,212 crore while the return on net worth fell to 22.2 percent compared to 30.4 percent a year ago.
• Total assets fell by 11 percent to Rs 8,601 crore owing to a 80 percent drop in cash and cash equivalents and 44 percent decline in bank balances.
• Trade receivables nearly doubled to Rs 356 crore. It takes the company nearly six months to convert its working capital to revenue. That may come down by one or two months, said Bhaskar.