Bumper debut: Mazagon Dock lists at 48% premium over issue price
1 min read . Updated: 12 Oct 2020, 10:17 AM IST
Premium- The first government-led IPO of FY21, Mazagon Dock Shipbuilders Ltd was subscribed 157.41 times during three-day share sale that commenced on 29 September
Mazagon Dock Shipbuilders made a robust stock markets debut on Monday. The stock was listed at Rs214.90, a 48.2% premium over its issue price of Rs145.
The first government-led IPO of FY21, Mazagon Dock Shipbuilders Ltd was subscribed 157.41 times during three-day share sale that commenced on 29 September. The government aimed to sell 15.17% stake in the Rs444 crore issue at a price band of Rs135–145 a piece.
At the IPO price, we believe the company is grossly undervalued given its strong order backlog, potential from coming submarine orders and its net cash balance (Rs5,800 crore in FY20), said analysts at Anand Rathi. “It also offers attractive dividend yield of 7.4%. The continuing covid-19 pandemic and a shutdown of operations at the Mazagon Docks would be strong headwinds to its performance," it added.
The company is a defence public sector undertaking shipyard under the department of defence production, ministry of defence, with a maximum shipbuilding and submarine capacity. It is actively engaged in construction and repair of warships and submarines for the ministry for use by the Indian Navy and other vessels for commercial clients. It is a wholly owned government company, conferred with the 'Mini-ratna-I' status in 2006. 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.
