Cochin Ship­yard IPO Sees Great De­mand; Sub­scribed 288 Times

The Economic Times - - Smart - Mar­ket In­tel­li­gence

Mumbai: The ₹ 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 ₹ 150-160 a share over the higher end of the IPO price band of ₹ 424-432. “A 10-15% up­side is eas­ily pos­si­ble on list­ing,” said G Chokkalingam, f o u n d e r, 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. HIGHS & LOWS

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