Stock Split: Hindustan Aeronautics Shares Split Into 1:2 Ratio; Here's What Investors Need To Know

Leading defence and aerospace company, Hindustan Aeronautics Limited (HAL) shares have split into the ratio of 1:2. This means, HAL's equity shares which had a face value of Rs 10 before September 28, have halved and are trading at a face value of Rs 5 each now. HAL is among the top dividend-paying stocks, and it turned ex-split on Thursday. After adjusting to the stock split, HAL's shares gained by nearly 2% on BSE during the day.

After the shares sub-division, HAL touched an intraday high of Rs 1,949 apiece, gaining by 1.6% on BSE. At the time of writing, HAL shares traded at Rs 1,928.35 apiece, up by 0.52% on the exchange. Its market cap stood over Rs 1.29 lakh crore.

Now, HAL's 52-week high and low are Rs 2,090 apiece and Rs 1,121 apiece.

Before the split of shares, HAL stood at Rs 3,836.55 apiece by the end of September 27th.

Earlier, HAL shares were supposed to adjust to the stock split on September 29. However, as per the regulatory filing on Thursday, HAL said after NSE's circular, "the face value and paid-up value of the equity shares of the Company has been changed from Rs 10/- each to Rs 5/- each, w.e.f. 28th September, 2023 instead of 29th September, 2023, due to change in settlement holiday."

As per BSE FAQs, 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.

Recently, 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.

In the first quarter of FY24, HAL earned 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."

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.

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 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.

On Trendlyne's website, HAL is currently seen as a mid-range performer (DVM) which are stocks with high durability, but midrange valuation scores and midrange momentum. These stocks are considered financially durable. The stock's Relative Strength Index (RSI) and Money Flow Index (MFI) indicators are in the mid-range to 41.8 and 49.6 respectively. Its price-to-book is low in the industry at 2.7, while PE TTM is at 10.7. 1-year Beta is at 0.94, indicating low volatility in the stock.

The consensus recommendation from 9 analysts for Hindustan Aeronautics is BUY, as per Trendlyne.

Disclaimer

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