Mumbai: Indian port operator Gujarat Pipavav Port Ltd on Thursday surged 22% on debut on the BSE as investors cheered its Danish pedigree and reasonable valuation.
Shares of Gujarat Pipavav were trading at Rs53.8, about 17% higher than the issue price in a firm Mumbai market, easing from a high of Rs58.4, a 27% jump.
The company, run by Danish shipping and oil conglomerate A P Moller-Maersk which owns 43%, raised about Rs500 crore in its IPO, which was subscribed 19.5 times.
“The company has probably the best credentials and parent in the world,” Arun Kejriwal, director of research firm KRIS, said, “A P Moller is today the authority in shipping so the pedigree is excellent.”
Gujarat Pipavav had a stellar debut as the offering was reasonably priced, he added.
Gujarat Pipavav plans to use about 60% of the proceeds to reduce its debt of Rs1,075 crore, while another 150 crore will be for expansion projects, managing director Prakash Tulsiani told reporters.
The company is growing faster than the market as container trade grew at 64%, outpacing the industry growth of 22% in the January-June period, Tulsiani said.
Its parent A P Moller owns Maersk Line, the world’s biggest container shipping company.Tulsiani said Gujarat Pipavav is on track to achieve Ebitda margins of about 55 to 60%, the industry average.
“Gujarat Pipavav comes off a low base compared to some established ports and to that extent the growth should command a premium,” Angel Broking, which had a ‘subscribe’ rating to the IPO, said in a client note.
Gujarat Pipavav also plans to set up port infrastructure on 1,000 acres (405 hectares) of land leased from the state government, its chief financial officer Hariharan Iyer said.
The $106 million Gujarat Pipavav share sale was managed by Kotak Mahindra Capital, IDFC Capital and IDBI Capital.