Cochin Shipyard IPO sees great demand; subscribed 76 times

The Rs 1,468-crore initial public offering of Cochin Shipyard ended on a strong note on Thursday, with the issue being subscribed 76.1 times. The offer received bids for 258.69 crore shares compared to 3.39 crore shares offered (excluding the portion for anchor investors).

There was a strong demand for the IPO from high net-worth individuals, with their category being subscribed 288.9 times. The qualified institutional buyers and retail investors' category was subscribed 63.5 times and 8.3 times respectively.

Cochin Shipyard is the largest public sector shipyard in India in terms of dock capacity. It caters to both de fence and commercial segments and offers both integrated ship building and ship repair facilities.

Seen as a proxy to bet on India's defence sector, most analysts had given a 'subscribe' rating to the issue.Analysts said after the strong response to the IPO, the stock is likely to see a strong debut as well.

It is also the only profitable shipyard compared to peers such as ABG Shipyard, Reliance Defence and Bharati Defence, which are reporting losses. Analysts viewed the valuation reasonable at 19 times FY17 earnings per share (post dilution).

In the grey market, where IPO applications are bought and sold before they are available for trade on stock exchanges, its shares are commanding a premium of Rs 150-160 a share over the higher end of the IPO price band of Rs 424-432. "A 10-15 per cent upside is easily possible on listing," said G Chokkalingam, founder, Equinomics Research & Advisory.

The company's IPO consisted of a fresh issue of 2.26 crore shares and an offer for sale of 1.13 crore shares by the government.