MUMBAI: The retail portion of Mazagon Dock Shipbuilders’ initial public offering (IPO) was fully subscribed in the first hour of the opening of the issue, a testimony to the fact that retail investors’ risk appetite has stayed intact despite the volatility in the markets over the past few days.
At 1250 pm, retail individual investors (RIIs) segment was oversubscribed 1.45 times, as they bid for 1,53,81,608 shares against 1,05,88,725 shares reserved for the category, as per data from the National Stock Exchange.
Total subscription of the issue was at 0.51 times. Mazagon Dock Shipbuilders’ IPO is the first stake sale by the government in FY21 so far. The Centre is looking to offload 15.17% of its shareholding in the company to raise ?444 core.
The price band has been fixed at ?135-145 apiece and the three-day share sale will run from 29 September to 1 October.
At upper end of the price band of ?145, earnings per share (EPS) and price to earnings (PE) of FY 2020 are ?19.0 and 7.62 multiple respectively and at the lower end, P/E multiple is 7.10, said SMC Global Securities Ltd.
Some key risks of the company as pointed out by Choice Broking Ltd are subdued economic activity post covid-19 led lockdown, unfavourable change in defence procurement policy and lower defence budget, project execution delay, increased competition and difficulty in maintaining the profitability.
The state-run entity comes under the department of defence production, ministry of defence and has a maximum shipbuilding and submarine capacity of 40,000 DWT.
The company constructs and repairs warships and submarines for the MoD for use by the Indian Navy and for that of commercial clients. It is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy and also one of the initial shipyards to manufacture Corvettes.
News Source:- livemint