What do experts, brokerages say about Gujarat Pipavav IPO?

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What do experts, brokerages say about Gujarat Pipavav IPO?

The initial public offer (IPO) of Gujarat Pipavav Port (GPPL), a developer and operator of APM Terminals Pipavav, has opened for subscription. Experts as well as brokerage houses have recommended investors to subscribe to the issue for long-term.

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The initial public offer (IPO) of Gujarat Pipavav Port (GPPL), a developer and operator of APM Terminals Pipavav, has opened for subscription. The company aims to raise Rs 500 crore through the issue. The issue will close on August 26.

The price band is fixed at Rs 42-48/share. GPPL has already raised more than Rs 92 crore from 20 anchor investors as against allocation of 2.04 crore shares at Rs 45 per share on Saturday.

Experts as well as brokerage houses have recommended investors to subscribe to the issue for long-term. Manish Bhatt of Prabhudas Lilladher says, one should subscribe to GPPL with long-term perspective and retail investors should apply at cut-off.

Investment Advisor, SP Tulsian has recommended this issue for investment even at the upper price band of Rs 48 per share. "As the infrastructure projects have huge potential and this being an operational port with the strong pedigree of the APMM Group, it represents an excellent investment bet."

"At the upper end of the price band, at 48, the company is valued at a PBV of 5.4 times, on pre-money basis and on 2.6 times, on post-money basis. Only other listed port operator, Mundra Port and SEZ, is presently trading at a PBV of 9.4 times, based on its book value as of 31st March 2010 and on PBV of 8.9 times, based on book value as of 30th June 2010. Thus, on a relative basis too, the issue is valued attractively."

However, only Hem Securities and Way2Wealth have advised to avoid the issue.

Brokerages views

Mehta Equities expects the company's operational efficiency to improve substantially on phase by phase expansion. "The strong background of A.P Moller-Maersk group, strategic location and fast growth in volumes will compel growth of the port going forward. We expect that the funds from the proceeding IPO would significantly reduce debt, the company could well move into the profit zone in a couple of years. While looking at the long term growth prospects of the company, Industry and scope to expand the margin we advice Investors to subscribe to this IPO with healthy returns on Investment."