HAL board approves stock split in 1:2 ratio, recommends ₹15 dividend
Hindustan Aeronautics Ltd (HAL) on Tuesday made several key announcements that will have a significant impact on the company and its shareholders. The board of directors has approved a 1:2 stock split, which involves dividing the existing shares with a face value of ₹10 each into two shares with a face value of ₹5 each. This move aims to improve the liquidity of HAL's stock, making it more accessible to investors. The record date for shareholders to qualify for the split shares has been set as September 29. Shareholders meeting the eligibility criteria will receive the new shares in their demat accounts, and the stock price will adjust proportionately to reflect the split.
The stock split is expected to attract more investors and increase the trading volume of HAL's stock. By reducing the face value of each share, the stock becomes more affordable for retail investors and potentially encourages broader participation in the market.
In addition to the stock split, HAL's board has declared a final dividend of ₹15 per equity share of ₹10 each for the fiscal year 2022-23. This generous dividend payout of 150% will be disbursed to eligible shareholders within 30 days from the approval date. The dividend is a distribution of the company's profits to its shareholders and can be a positive incentive for investors seeking income from their investments.
It's worth noting that HAL's stock faced a temporary suspension from trading in the Futures and Options (F&O) segment due to exceeding open interest caps. However, it has now been removed from the ban list, allowing investors to resume F&O trading freely. This development restores the ability for investors to engage in derivative trading of HAL's stock, which can provide additional flexibility and opportunities for investment strategies.
HAL has demonstrated strong financial performance and growth, as indicated by its price-to-earnings (PE) ratio of 21x, which reflects the market's valuation relative to its earnings. The return on equity (ROE) and return on capital employed (ROCE) figures of 30% and 31% respectively showcase the company's profitability and capital efficiency. These positive financial indicators suggest that HAL has been effective in generating returns for its shareholders.
Over the past three years, HAL's stock has experienced impressive growth, with increases of 107%, 258%, and over 400% respectively. This growth can be attributed to various factors, including HAL's strong order backlog of around ₹82,000 crores and a robust long-term order pipeline exceeding ₹1,50,000 crore. These substantial orders provide a solid foundation for the company's future revenue and growth prospects.
HAL is also actively pursuing export partnerships and collaborations with countries such as Argentina, the Philippines, Egypt, Sri Lanka, Maldives, Botswana, Thailand, and Nigeria. These strategic alliances offer opportunities for expansion and can positively impact the company's future prospects by diversifying its customer base and revenue streams.
Furthermore, HAL is well-positioned to benefit from the Indian government's 'Make in India' initiative, which aims to promote domestic manufacturing and reduce reliance on imports. As a leading player in the aerospace and defense sector in India, HAL is expected to capitalize on this favorable environment and contribute to the country's self-reliance goals.
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