Shares of public sector undertaking Bharat Dynamics Ltd. plunged 13.9% to \u20b9331.15 a share on the BSE as the Union government began the process of divesting a further 15% stake in the PSU through an offer-for-sale (OFS) at a floor price of \u20b9330 per share.<\/p>\n
Prior to the OFS, which will continue on Wednesday, the government had an 87.75% stake. <\/p>\n
The company went public in May 2018 at an offer price of \u20b9428.<\/p>\n
Aligned to OFS price<\/h2>\n
\u201cThe current market price of [\u20b9331.15] is aligned to the OFS price. The drop in stock price was bound to happen, as the OFS is coming at a discount to CMP,\u201d said Arjun Mahajan, head-Institutional at Reliance Securities. <\/p>\n
He said though the stock was still trading at a discount to its IPO price, the recent government push to increase on increasing domestic defence procurement, higher localisation, and focus on lean cost structure would drive revenue growth for the PSU.<\/p>\n
\u201cAdditionally, the recent stand-off between India and China on the border further makes a compelling argument for make in India and focus on defence capabilities build up. Thus, this offer for sale is a good opportunity to look at the stock,\u201d he said.\u201cFor the retail investor, there is a further discount of \u20b920 and thus it may be worth considering. Defence is a focus sector and such opportunities should be considered for investors who have a long-term investment horizon,\u201d added Mr. Mahajan.<\/p>\n<\/div>\n