After Rs 15/Share Dividend, Defence Stock HAL To Turn Ex-Split In 1:2 Ratio This Week

Defence stock Hindustan Aeronautics has witnessed tremendous gains so far in the current year 2023, on the back of a strong order book. Not just giving hefty returns, HAL has rewarded its shareholders in the form of hefty dividends as well. But HAL will be in focus for a whole different reason this week. The company will trade ex-split for the shares sub-division in the ratio of 1:2.

As the days of stock split nears, HAL shares rallied by nearly 2% on Tuesday by touching an intraday high of Rs 3,917 on BSE.

According to the regulatory filing, the company fixed September 29 as the record date for determining eligible shareholders for the sub-division/ split of existing 1 (one) Equity Share of the face value of Rs 10/- each fully paid up into 2 (Two) Equity Shares of Rs 5/- each fully paid-up.

Generally, listed companies declare a stock split of already owned shares into much smaller shares. This is done to improve liquidity by breaking the shares into smaller sizes. The face value of the shares reduces in proportion to the split ratio, however, there is no impact on the company's share capital and reserves. Although the price value of a stock reduces in a stock split, it the number of shares held rises in the investors' portfolio of that specific stock.

Earlier, HAL shares turned ex-dividend for a final dividend payout of Rs 15 per share for the financial year 2022-23, amounting to Rs 501.58 crore. For the said fiscal, HAL has paid a first and second interim dividend of Rs 20 per share each, aggregating to Rs 1,337.55 crore. Overall, in FY23, HAL's dividend payout will be to the tune of Rs 1,839.13 crore to shareholders.

During FY23, the company recorded the highest-ever turnover of Rs 26,360.56 crore, experiencing strong growth of 8% from the previous year's Rs 24,361.66 crore. PAT increased by 14% to Rs 5,811.17 crore in FY23 as against Rs 5,086.50 crore in the previous fiscal. Its order book position stood healthy at Rs 81,784 crore as of March 31, 2023.

However, in Q1FY24, HAL's profitability came under pressure on a sequential basis. HAL posted a consolidated net profit of Rs 814.09 crore in Q1FY24 as against Rs 620.13 crore in Q1FY23 and Rs 2,831.19 crore in Q4FY23. Similarly, total revenue from operations was at Rs 3,915.35 crore in Q1FY24 as against Rs 3,622.46 crore in Q1FY23 and Rs 12,494.67 crore in the March 2023 quarter.

Giving future outlook, in its annual report for FY23, C.B. Ananthakrishnan, Chairman and Managing Director of HAL said, "As continuous efforts towards achieving self-reliance "Atmanirbharta" in the Aerospace & Defence industry in India, HAL will remain involved in supporting Startup Companies, SMEs/ MSMEs, Tier - II and III vendors. HAL will also keep handholding the vendors and suppliers in R&D, capability development and extended employment generation."

In the near future, Ananthakrishnan believes that the Indian Defence market will continue to be a prime revenue source for HAL due to projects like LCA Mk1A, LCH, LUH and HTT-40. The company has taken various initiatives to make systems more agile, effective, cost-efficient and to be competitive. Enhancement of HAL capability is being planned to cater above projects. New production lines are being installed for HTT-40 and LCA Mk1A Production.

Also, in the near term, the company is looking forward to diversifying and increasing its presence in UAV, Civil MRO & allied operations, Digital Solutions and new space segments as strategic initiatives. Additionally, the company is focusing on strengthening marketing efforts, expanding its geographical presence and collaborating with Indian Industry / Global OEMs to boost export sales.

Year-to-date, HAL stock has zoomed by over 52% on the exchange. In 5 years, the stock becomes a multi-bagger with an upside of more than 395%.

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