Kochin Shipyard IPO .-Its first day of trading

 

Much awaited Cochin Shipyard IPO hit the stock market floor on 11th of August. It was open for general public for subscription from 1st -3rd August.It has been one among the most sought after Public Offers in last few months, being receiving subscription applications as high as 76 times. Cochin Shipyard, shares closed 20% higher at Rs522 on BSE, which was the upper end of the price band of Rs424-432 per share.

Cochin Shipyard Limited (CSL) is the largest shipbuilding and maintenance facility in India. It is part of a line of maritime-related facilities in the port-city of Kochi, in the state of Kerala, India. Cochin Shipyard ltd{CSL} is a PSU enjoying”Miniratna” status and the largest public sector in India in terms of dock capacity.
Services provided by the shipyard are building platform supply vessels and double-hulled oil tankers. It builds the first range of indigenous aircraft carriers for the Indian Navy.

Cochin Shipyard was incorporated in 1972 as a Government of India company, The yard has facilities to build vessels up to 1.1 million tons and repair vessels up to 1.25 million tons, the largest such facilities in India. In August 2012, the Government of India announced plans of divestment to raise capital of Rs. 15 billion (15,000 million Rupees) for further expansion through an Initial Public Offering (IPO).

In addition to shipbuilding and ship repair, it also offers marine engineering training. As of May 31, 2017, the company has two docks – dock number one, primarily used for ship repair (“Ship Repair Dock”) and dock number two, primarily used for shipbuilding (“Shipbuilding Dock”). CSL’s Ship Repair Dock is one of the largest in India and enables it to accommodate vessels with a maximum capacity of 125,000 DWT and Shipbuilding Dock can accommodate vessels with a maximum capacity of 110,000 DWT.

The IPO, a fresh issue of 22.65 million shares, was expected to fetch the company Rs978 crore at the upper end of the price band. The Union government also sold 10% of its stake.

The funds from the fresh issue of shares are to be used to fund two major projects and also to improve the shipbuilder’s existing facilities.

On performance front, the company continued to post posted turnover/net profits of Rs.1660.45 cr. / Rs. 69.28 cr. (FY15), Rs. 2096.88 cr. / Rs. 291.75 cr. (FY16) and Rs. 2208.50 cr. / Rs. 312.18 cr. (FY17).

The company has order on hands worth Rs. 2936 crore as on 31.03.17. CSL has association with world leaders like Wartsila, GTT, Rolls Royce Marine. It has completed constructions of 20 FPVs for the Indian Costal Guard ahead of schedules. More that 72% revenue is coming from defence sector. Its foreign clients include NPCC, Clipper, Sigba.

 

One market lot of 30 shares were put to offer at price range of 424-432 Rs.           Whereas a discount of 21 Rs was made for the employees and the retail investors.

Nearly all the broking firms had given a subscribe rating to new issue. And it saw a very heavy demand. It was heavily oversubscribed, nearly 76 times. We have seen recently such demand for few issues like S Chand IPO, which is currently trading very low{468 Rs/share} compared to the enlisted price{680Rs/share} and the Central Depository Services Limited, which is still above its listed price.CDSL started trading on floor with premium price at 260 Rs and even crossed 425 Rs mark, but gradually its price fell .On Friday it closed at around 305 Rs/share.

Due to little downwards movement witnessed in global markets and in Indian markets too, Kochin shipyard did not make a high as expected as 550-600 Rs/share on day 1.

It will be observed that how the share trades from tomorrow .It has all the potential easily to cross 600 Rs/share mark.

 

Harsh Vardhan Pathak.

 

{Sources-Online reviews about the issue /the introduction of the company}

 

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