The maiden public issue of Mumbai-headquartered Mazagon Dock Shipbuilders is set to open for subscription on September 29. The initial public offering, the eleventh IPO this year, will close on October 1 and the listing on BSE and NSE is expected on October 12.
The book running lead managers to the issue are Yes Securities (India), Axis Capital, Edelweiss Financial Services, IDFC Securities and JM Financial.
Here are 10 key things you should know before subscribing the issue:
1) Public Issue
The IPO consists an entire offer for sale of 3,05,99,017 equity shares by the Ministry of Defence, Government of India.
The issue includes an employee reservation portion of 3,45,517 equity shares. The total offer will constitute 15.17 percent of the post issue paid-up equity.
One can bid for a minimum of 103 equity shares and in the multiples of 103 thereafter.
2) Price Band
Mazagon Dock, in consultation with merchant bankers, has fixed the IPO price band at Rs 135-145 per equity share.
3) Funds Raising
The company aims to raise Rs 413 crore at the lower price band and nearly Rs 444 crore at the upper price band.
4) Objects of Issue
The objects of the offer are to carry out the disinvestment of 3,05,99,017 equity shares by the government and achieve the benefits of listing the shares on the stock exchanges. That means the company will not receive any proceeds from the offer and these will go to the selling shareholder.
5) Company Profile
State-owned Mazagon Dock is a defence public sector undertaking shipyard under the Department of Defence Production, Ministry of Defence, with a maximum shipbuilding and submarine capacity of 40,000 DWT, a CRISIL Report says. It is engaged in the construction and repair of warships and submarines for the government for use by the Indian Navy and other vessels for commercial clients.
The company was conferred the 'Mini-Ratna-I' status in 2006. It is India's only shipyard to have built destroyers and conventional submarines for the Indian Navy. It is also one of the initial shipyards to manufacture Corvettes (Veer and Khukri Class) in India, the CRISIL report says.
The business divisions in which the company operates are shipbuilding (which includes the building and repair of naval ships), and submarine and heavy engineering (which includes building, repair and refits of diesel electric submarines). The company is building four P-15 B destroyers and four P-17A stealth frigates and undertaking repair and refit of a ship for the MoD for use by the Indian Navy.
Its shipyard is located on the west coast of India, on the sea route connecting Europe, West Asia and the Pacific Rim, a busy international maritime route.
6) Competitive Strengths
a) Only public sector defence shipyard constructing conventional submarines
b) World-class infrastructure capable of serving the requirements of the Ministry of Defence
c) Location of facilities promotes closer association with vendors and customers
d) Increase in indigenisation of vessels and implementation of the 'Make in India' programme
e) Established track record, in a strong financial position and a strong order book
f) Experienced board and senior management team and skillfully trained workforce
7) Business Strategies
In its red-herring prospectus, the company said its objective is to enhance market position by expanding capabilities, capitalising on opportunities, both in domestic and international markets, and to enhance competitiveness.
a) Export of products
b) Focus on ship repair
c) Augmentation of infrastructure and enhancing manufacturing capacity.
8) Order Book
Its order book for shipbuilding and submarines and heavy engineering was Rs 54,074 crore, comprising three major shipbuilding projects and two submarine projects as of July 2020.
Mazagon Dock posted a 7.9 percent YoY growth in revenue at Rs 4,977.65 crore for FY20, 3.2 percent rise in FY19 and 27 percent growth in FY18. It has consistently reported profits in the last four financial years but there has been volatility as the bottomline fell 10.7 percent YoY to Rs 477.06 crore in FY20 against 7.3 percent rise in FY19 and 17 percent decline in FY18.
10) Management Team