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UTI AMC lists tepid, Mazagon Dock makes strong stock markets debut

State owned Mazagon Dock Shipbuilders made a robust stock market debut on Monday Photo: iStockphotoPremium
State owned Mazagon Dock Shipbuilders made a robust stock market debut on Monday Photo: iStockphoto

  • Benchmark BSE Sensex ended at 40,593.80, up 84.31 points or 0.21% and the Nifty was at 11,930.95, adding 16.75 points or 0.14%
  • Shares of UTI AMC made a weak stock market listing, ending at 481.50, a 13.08% discount over its issue price of 554. The stock had started trading at 500, nearly 10% below its issue price

Shares of UTI Asset Management Co. Ltd (AMC) and Mazagon Dock Shipbuilders received contrasting responses on their stock markets debut on Monday. Shares of UTI AMC made a weak stock market listing, ending at 481.50, a 13.08% discount over its issue price of 554. The stock had started trading at 500, nearly 10% below its issue price.

Benchmark BSE Sensex ended at 40,593.80, up 84.31 points or 0.21% and the Nifty was at 11,930.95, adding 16.75 points or 0.14%.

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, aiming to raise 2,160 crore in the upper price band, closed on 1 October. Shareholders State Bank of India, Punjab National Bank, Bank of Baroda, Life Insurance Corporation of India and T Rowe Price International sold part of their stakes in UTI AMC via the IPO.

According to Parvati Rai, research-head, KRChoksey Shares and Securities Pvt. Ltd UTI’s product mix remains tilted towards debt and Liquid assets which are less favourable to retail investors. Market leaders like HDFC Asset Management Company and ICICI Prudential Mutual Fund have more favorable mix with equity assets and hybrid assets commanding a greater share in total AUM as compared to the Industry.

“If we compare the valuations of HDFC AMC and Nippon India Mutual Fund (NAM India) to UTI AMC, fair value turns out to be 750-760. Hence, in terms of valuation, the IPO looks attractive and an upside potential of 35%," she said.

Meanwhile, state owned Mazagon Dock Shipbuilders made a robust stock market debut on Monday. The stock ended at 171.95, 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 Shipbuilders Ltd was subscribed 157.41 times during its three-day share sale that commenced on 29 September. The government aimed to sell 15.17% stake in the 444 crore issue at a price band of 135–145 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 ( 5800 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.

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