BEML Surges 20% After Government's Decision To Sell 26% Stake

BEML Limited shares surged as much as 20 per cent to hit an intraday high of Rs 1,188, after the company announced that the government will sell a 26 per cent stake in the defence equipment manufacturer.

The move by the government will make BEML Limited the first major PSU to be sold through strategic disinvestment, which may fetch the exchequer over Rs 1,000 crore.

In a notification to the stock exchanges post-market hours on Friday, BEML Limited said the Cabinet has given an 'in-principal' approval for strategic disinvestment of 26 per cent equity shares in the company out of government shareholding of 54.03 per cent.

At Friday's market price of Rs 999.50 a share on the BSE, a 26 per cent stake in BEML could fetch the exchequer over Rs 1,000 crore. After the strategic sale, government stake in the PSU would come down to 28.03 per cent.

"The said shareholding would be sold to the strategic buyer/s to be identified by the government of India by following due procedure," BEML Limited said.

The strategic sale approval is just the third in over 12 years. In September, the Cabinet had cleared strategic sale of Bharat Pumps and Compressors Ltd, while in December it had approved sale of India's first pharma company Bengal Chemicals and Pharmaceuticals Ltd as well as Hindustan Antibiotics Ltd.

These are among the public sector units that NITI Aayog has identified for sale of government's majority stake to private companies in order to bring in greater efficiency and professionalism in their functioning.

Established in May 1964, BEML Limited operates on three major business verticals for associated equipment manufacturing - mining and construction, rail and metro and defence and aerospace. Its turnover has risen to more than Rs 3,500 crore.

State-run BEML Limited, under the administrative control of defence ministry, provides equipment support to Indian Army and other defence forces by manufacturing variants of Tatra vehicle for all terrain operation.

The government is targeting Rs 56,500 crore in disinvestment proceeds this fiscal year. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.

The fiscal target continues to remain far off with total collections of about Rs 24,000 crore in the nine months of the financial year so far.

Following this development, shares of BEML Limited came in high demand. Over 8 lakh shares of BEML Limited changed hands on the BSE compared with an average of 35,000 shares traded daily in the past two weeks.

BEML Limited shares ended 16.55 per cent higher at Rs 1,158.

(With inputs from PTI)