Cochin Shipyard IPO sails through, fully subscribed on Day 2

NEW DELHI: The Rs 1,468-crore initial public offering ( IPO) by Cochin Shipyard got fully subscribed on Day 2 of the bidding process.

By 10.30 am, the issue had received bids for 3,47,42,880 shares, which was 1.01 times the total issue size of 3,39,84,000 shares, data compiled with BSE and NSE showed.

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The quota limit for retail individual investors as subscribed about 1.9 times. The quota limit for non-institutional investors was subscribed 35 per cent while QIB quota was subscribed 72 per cent.

“CSL is the only profitable shipyard compared to peers like ABG Shipyard, Reliance Defence and Bharati Defence which are reporting losses. While there is a huge opportunity in shipbuilding (Defence, Make in India, inland waterways), it would be difficult to take a long term view on the stock as its financials seem to have shown improvement only in last 2 years,” Centrum Broking said.

“There could be a possibility of lumpy performance owing to the volatility in the shipping building industry. However, in the current market there is a lot of interest for IPOs. If the same happens with this issue despite growth being inconsistent, the listing could still be at a premium to the offer price,” it said.

The issue is priced in the Rs 424- 432 per share range and bids can be made for minimum 30 equity shares and in multiples of 30 shares thereafter. There will be a discount of Rs 21 per share for retail investors and employee categories. The issue will close on Thursday.

The company’s order book stands over Rs 3,300 crore. The miniratna firm has bid for three major tenders of the Indian Navy. Experts believe the governments’ Make in India initiative and focus on defence spends may open up opportunities for the company.

Brokerage Motilal Oswal Securities said that the company’s continuous focus on high margin repair business, strong positioning in west coast of India, healthy order book, negligible debt cash and bank balance of Rs 2000 crore and decent ROEs of 16 per cent, make the IPO interesting.