Pipavav Shipyard’s track record a concern: Keynote Capitals
Keynote Capitals is of the view that Pipavav Shipyard’s IPO pricing looks expensive as compared to its peers.
By ET Bureau |
MUMBAI: Keynote Capitals is of the view that Pipavav Shipyard���s IPO pricing looks expensive as compared to its peers.
The IPO has been priced at 2.3x book value based on post listing equity capital, which is expensive in comparison ABG Shipyard and Bharati Shipyard, which trades at 1.3x and 0.7x to book value based on FY10 estimates,the brokerage firm said.
Keynote added that the company's short track record is a major concern. The company's order book shows orders of 22 Panamax bulk carriers aggregating to Rs 4119 crore. However, the company has firm orders for 10 carriers (Rs 1788 crore) only while rests are either under negotiation or under arbitration.
Currently, the company is constructing 4 vessels, of which the first would be delivered in April 2010 while subsequent deliveries expected to occur at intervals ranging from 1-3 months thereafter. The company will
also provide services to oil & gas sector and defense sector, which are
complementary to its shipbuilding business.
Opportunities will come from demand for new vessels, scrapping of older vessels and aging fleet, government's initiatives to increase investments in the shipbuilding sector and the huge investments in oil & gas sectors are the major growth drivers.
The IPO has been priced at 2.3x book value based on post listing equity capital, which is expensive in comparison ABG Shipyard and Bharati Shipyard, which trades at 1.3x and 0.7x to book value based on FY10 estimates,the brokerage firm said.
Keynote added that the company's short track record is a major concern. The company's order book shows orders of 22 Panamax bulk carriers aggregating to Rs 4119 crore. However, the company has firm orders for 10 carriers (Rs 1788 crore) only while rests are either under negotiation or under arbitration.
Currently, the company is constructing 4 vessels, of which the first would be delivered in April 2010 while subsequent deliveries expected to occur at intervals ranging from 1-3 months thereafter. The company will
also provide services to oil & gas sector and defense sector, which are
complementary to its shipbuilding business.
Opportunities will come from demand for new vessels, scrapping of older vessels and aging fleet, government's initiatives to increase investments in the shipbuilding sector and the huge investments in oil & gas sectors are the major growth drivers.
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