Mazagon Dock Shipbuilders IPO: Public Sector Disinvestment. Should you Subscribe?

September month was witnessing a flood of IPOs as Happiest Minds, Route Mobile, Computer Age Management Services, Chemcon Speciality Chemicals Angel Broking Limited and Unit Trust of India have opted the route of first public offer to get their listing on the exchanges and achieve listing gains from rising equity markets. Only an IPO from the government organization was the absence in the IPO fair month, which has been filled by Mazagon Dock Shipbuilders.

The company claims to operate in two divisions: Shipbuilding divisions which undertakes building and repair of naval ships whereas submarine division involves heavy engineering includes building, repairing and refitting diesel electric submarines. The company has managed to build 795 vessels, including 25 warships, six Leander class frigates, three submarines, three Godavari class frigates, three Shivalik class frigates, three corvettes, four missile boats and six destroyers till 2020.

The issue size of the IPO is 444 crores in which the Government of India is disinvesting 30,599,017 shares with Face Value of Rs. 10 and the net proceeds will not be used for any investment plan.

 Mazagon IPO Details:

  • Issuer Company: Mazagon Dock Shipbuilders
  • Industry: Defence Services
  • IPO Size: 443.69 cr.
  • Price Band: 135-145
  • Issue Open Date: 29 Sep, 20
  • Issue Close Date: 01 Oct, 20
  • Listing Date: 12 Oct, 20
  • Minimum Lot Size: 103 shares
  • Employee Discount: NA
  • Face Value: 10 RS. Per share
  • Retail Allocation: 35%
  • Listing Exchange: NSE, BSE

About the Company:

Mazagon Dock Shipbuilders Limited is a Defence Public Sector Undertaking under ministry of Defence. It is one of the India’s leading shipyards with a capacity to meet requirements of the Indian Navy. Mazagaon dock was first constructed in 1774 as a small dry dock, which was incorporated as a public limited company in 1934, before being taken over by Govt. of India in 1960.

The shipyard builds warships and conventional submarines at its facilities in Mumbai and Nhava. Major customers for the shipyard include Indian Navy and Coast Guard.The company claims to be the India’s only shipyard that builds destroyers and conventional submarines for the Indian Navy. The company is one of the ship builders for P17-A project for building next generation guided missile stealth frigates through collaboration with Fincantieri, Italy. The company has dropped the repair work of ships since 2016.

Peer Comparison:

Indian shipbuilding business is not restricted in the hands of public sector only but many private players have been involved in building and repairing shipbuilding and submarine division. In the public sector space, the company will face competition from Garden Shipyard, Goa shipyard, Cochin shipyard and Hindustan shipyard out of which Garden shipyard and Cochin shipyard are listed while in the private sector, Reliance Defence and Engineering Limited, L&T Shipyard, Bharti Shipyard, ABG Shipyard and Tebma Shipyard are involved in the similar business.

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