Home Business Business Mazagon Dock Shipbuilders IPO day 1: Issue fully subscribed, retail portion...

Business Mazagon Dock Shipbuilders IPO day 1: Issue fully subscribed, retail portion 4.5 times

The public issue of Mazagon Dock Shipbuilders, the defence public sector undertaking, witnessed good response from investors on September 29, the first day of bidding itself.The Rs 444-crore public offer is subscribed 2.09 times as it has received bids for 6.39 crore equity shares against IPO size of 3.05 crore shares, the subscription data available on the exchanges showed.Retail investors seem to be strongly positive on the stock as their reserved portion subscribed 5.6 times.The portion set aside for non-institutional investors saw 78 percent subscription and that of employees 27.7 percent, while qualified institutional buyers’ category saw 3 percent subscription.The price band for the issue has been fixed at Rs 135-145 per share and the IPO subscription will close on October 1.Mazagon Dock Shipbuilders IPO opens: Subscribe or avoid?The government is going to sell little over 15 percent stake in Mazagon Dock Shipbuilders via public issue which consists an offer for sale of 3,05,99,017 equity shares by the government. It is a part of government’s divestment programme.Mazagon Dock is the only public sector defence shipyard constructing conventional submarines with a maximum shipbuilding and submarine capacity of 40,000 DWT. As on July 2020, it had healthy order book of Rs 54,074 crore, to be executed over next 6-7 years which gives strong revenue visibility ahead.Mazagon Dock Shipbuilders IPO Opens Today: 10 key things you should knowIt is India’s only shipyard to have built destroyers and conventional submarine for Indian Navy and one of the initial shipyards to manufacture corvettes in India.Company plans to increase its ship repair activities in the future (being a higher margin business due to shorter time, resultant an early booking of revenue), could be a big positive which will help to generate more revenues, increase its client base, and reduce its dependency on the MOD for future orders, Rudra Shares said.Currently, ship repair is just 3.5 percent of total revenue & is expected to reach 15-20 percent of total revenue in next 5 years.”On an upper price band of Rs 145, with EPS at Rs 21.36 for FY20, the stock is available at a P/E ratio of 6.78x (lower than its industry peers), makes valuation attractive. Hence, we recommend to subscribe the issue for listing as well as long term gains,” said Rudra Shares.”Further, it is a cash rich company having no debt, long term visibility of top line growth, attractive dividend yield and healthy ROE of 15 percent for FY20, will command premium valuations. Though, the company has negative net cash flows from operating activities in FY20, could be a concern,” the brokerage added.Amarjeet Maurya – AVP – Mid Caps at Angel Broking also recommended subscribe to the issue with a long-term horizon. “Mazagon Dock has a healthy ROE of around 16 percent coupled with highest dividend yield (7.4 percent) and higher cash on balance sheet among its peers.”

Read More


Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

How can I tell the difference between the flu and COVID-19?

Last Updated : Oct 01, 2020 01:54 PM IST | Source: AP Body aches, sore throat, fever, cough, shortness of breath, fatigue and headaches are symptoms shared by the two. How can I tell the difference between the flu and COVID-19?It’s impossible to tell without a test. Influenza and COVID-19 have such similar symptoms, you…

Cardiac arrest common in sick Covid-19 patients

Photo for representational purpose only. iStock New York, October 1 Cardiac arrest is common in critically ill patients with Covid-19 and is associated with poor survival, particularly among patients aged 80 or older, say researchers. The findings, published in the journal The BMJ, could help guide end-of-life care discussions with critically ill patients with Covid-19…

Beware: Vitamin D deficiency can make you obese and lead to stunted growth

Vitamin D, or the ‘Sunshine Vitamin as it is also known as, is one of the essential nutrients that makes your bones and teeth stronger, wards off infections and diseases and keeps you cheerful. This fat-soluble vitamin can also bring down your risk of cancer, autoimmune diseases, heart disease and diabetes. But unfortunately, as many…

COVID-19 cases decline, deaths increase in Chandigarh as September ends

Naina MishraTribune News ServiceChandigarh, October 1 As September comes to an end, the Union Territory has started to witness a decline in the number of positive COVID-19 cases, and daily tests.  However, COVID deaths have increased with every passing week.  September has recorded 100 COVID-19 deaths whereas August reported only 39 deaths.  At least three…

Recent Comments