State-owned defence company Mazagon Dock Shipbuilders' initial public offering has seen strong demand since the day one. It is now subscribed 157.4 times so far on October 1, the last day of bidding, which was the highest subscription than Happiest Minds (151 times) this year.
The public issue has received bids for 481.6 crore equity shares against offer size of 3.06 crore equity shares, the data available on the exchanges showed.
The non-institutional investors increased their bids significantly on the final day as their reserved portion has oversubscribed by 679 times.
Retail investors have been active in bidding from the day one as the portion set aside for these investors has seen 35.6 times subscription.
The reserved portion of qualified institutional buyers witnessed 89.7 times subscription and that of employees 3.88 times.
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Mazagon Dock is going to raise Rs 444 crore via public issue which consists of only offer for sale of 3,05,99,017 equity shares by the government. The issue included employees reserved portion of 3,45,517 equity shares.
"We believe Mazagon Dock IPO offer gives investors an opportunity to play on Indian growing defense story allied with Make in India push. We read out that it is the only company in the country to manufacture warships and submarines for the Indian Navy and also constructs cargo ships, multipurpose support vessels, dredgers and water tankers," Prashanth Tapse, AVP Research at Mehta Group told Moneycontrol.
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Most of bids so far seem to have received at higher end of price band of Rs 135-145 per share.
"On valuations parse at upper price band (Rs 145), the issue is asking for market capitalisation Rs 2,925 crore with PE (FY20) 6x compared to industry average of around 10x and P/BV below 1x versus industry average of around 1.52x, which seems to be fairly and reasonably prices with something left on the table for listing gains," Tapse said.
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Considering attractive valuations and the objective of the issue which is to carry out the disinvestment of equity shares by the selling shareholder constituting 15.17 percent (offer for sale) paid up equity share capital, Tapse recommended investors to go a subscribe for listing gain.
Mazagon Dock Shipbuilders, with having a Mini Ratna status, was incorporated in 1934 as a private company which was later taken over by the government under warship development programme and is now India's leading defence PSU under Ministry of defence.
Company is primarily engaged in constructing and repairing warships and submarines and other types of vessels i.e. cargo ships, multipurpose support vessels, barges and border outposts, tugs, dredgers, water tankers, etc. for commercial clients.
It is the only shipyard to build destroyers and conventional submarines to be used by the Indian Navy with a maximum shipbuilding and submarine capacity of 40,000 DW.
As of now, it has built 795 vessels, including 25 warships, 4 missile boats, 3 submarines, 6 Leander class frigates, 3 Godavari class frigates, 3 Shivalik class frigates, 3 corvettes, and 6 destroyers.