Country's largest defence company Mazagon Dock Shipbuilders listed at Rs 216 (49 percent premium to issue price), which was on expected lines, but cooled off a bit due to some profit booking at higher levels on October 12.
It was up 31.45 percent at Rs 190.60 compared to its issue price of Rs 145, but was down 11.86 percent from its opening price of Rs 216.25 on the BSE, at 11:02 hours IST.
Given the listing as per expectations, experts advised booking profits, and wait for correction to buy at lower levels given the strong orderbook and government's increased focus on defence sector.
"We would recommend to exit from stock and book the profit. Recently, the government has taken steps to ban 101 defence items, which clearly indicates government's focus on indigenization to promote and create big opportunities in Indian defence sector. Going ahead, it would be beneficial for companies like Mazagon Dock. However, any correction in future would create buying opportunity in stock," Amarjeet Maurya, AVP - Mid Caps at Angel Broking told Moneycontrol.
Maurya had expected it to list around 60-70 percent premium due to lower valuation and strong order book of Rs 54,074 crore which is to be executed in next 6-7 years, compared to Garden Reach Shipbuilders.
Astha Jain, Senior Research Analyst at Hem Securities also advised that investors should book profit on 3/4th of allotted shares on day of listing and the balance can be hold for long term.
Mazagon Dock Shipbuilders (MDL) is a defence PSU with maximum capacity of around 40,000 DWT and it is engaged in construction, repair of warships and submarines for Ministry of Defence. It is India's only shipyard to have built destroyers and conventional submarine for Indian Navy and one of the initial shipyards to manufacture corvettes in India.
Company primarily operates in two divisions - shipbuilding under which it is currently building four P-15 B destroyers, four P-17A stealth frigates; and submarine & heavy engineering division under which it is currently building or in the process of delivering four Scorpene class submarine under transfer of technology from Naval group, France and a medium refit & life certification submarine.
Company being the only public sector defence shipyard constructing conventional submarines has world class infrastructure.
"Company's order book is looking healthy which gives strong revenue visibility for coming few years. Also company is intending to increase its ship repair activities which is comparatively higher margin business due to shorter time & early booking of revenue model. Hence future prospects of company looks bright," Astha Jain said.
The Rs 443-crore public offer for Mazagon Dock was subscribed 157.4 times during September 29-October 1. The government has received all issue proceeds from the issue as it was an offer for sale.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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