'Subscribe’ to Gujarat Pipavav Port IPO: Nirmal Bang

MUMBAI: Nirmal Bang has advised investors to ‘subscribe’ to the initial public offering of Gujarat Pipavav Port.

"We cannot directly compare GPPL with Mundra Port and SEZ Ltd as the company is much smaller and provides limited services as compared to Mundra which has SEZ and other assets. GPPL has a lower margin as compared to Mundra as the company’s utilization rate was lower and it was incurring costs to expand capacity and relocate its LPG cargo ports.

Going forward, with the operational efficiency, startup of LPG cargo services and lower debt burden we expect the company’s margin to improve substantially. Looking at the long term growth prospects of the company and scope to expand the margin we recommend to subscribe to this IPO," the report said.

GPPL IPO intends to raise Rs. 500 Crs through the sale of shares. The price band is kept at Rs 42-48 per share. At the lower end of the price band the company will sell 11.94 crore shares while at the upper end it will sell 10.42 crore shares.

The company will use the proceeds towards repayment of loan, investment in capital expenditure to improve and enhance the infrastructure facilities at APM Terminals Pipavav and capital equipment which is needed on a recurring basis to augment its cargo handling capacity.