Home / Markets / Stock Markets /  UTI AMC disappoints, Mazagon Dock shines

Shares of UTI Asset Management Co. Ltd (AMC) and Mazagon Dock Shipbuilders Ltd made contrasting debuts on stock exchanges on Monday. UTI AMC slumped below its issue price while state-run defence shipbuilder Mazagon Dock had a robust opening day.

UTI AMC closed at 481.50, at a 13.08% discount to its issue price of 554. The stock opened at 500 on the NSE,nearly 10% below its issue price. The initial public offering (IPO) of the mutual fund company with a price band of 552 -554 apiece was subscribed 2.3 times. The three-day sale, which closed on 1 October saw the company raising 2,160 crore in the upper price band. Shareholders State Bank of India, Punjab National Bank, Bank of Baroda, Life Insurance Corp. of India and T Rowe Price International sold part of their stakes in UTI AMC via the IPO.

Parvati Rai, research head of KRChoksey Shares and Securities Pvt. Ltd, said UTI’s product mix remains tilted towards debt and liquid assets, which are less favourable to retail investors. “If we compare the valuations of HDFC AMC and Nippon India Mutual Fund (NAM India) to UTI AMC, the fair value turns out to be 750-760. Hence, in terms of valuation, the IPO looks attractive with an upside potential of 35%," Rai added.

Meanwhile, Mazagon Dock closed at 171.95, an 18.5% premium to its issue price of 145. Earlier in the day, the stock listed on the exchanges at 48.2% higher over its issue price.

The first government-led IPO of FY21, Mazagon Dock was subscribed 157.4 times during its three-day share sale that began on 29 September. The government sold 15.17% stake in the 444 crore issue.

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 ( 5,800 crore in FY20), said analysts at Anand Rathi.

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