IPO Analysis: Mazagon Dock Shipbuilders

IPO Analysis: Mazagon Dock Shipbuilders

Mazagon Dock Shipbuilders Limited,  called “Ship Builder to the Nation”, is one of India’s leading Defence public sector undertaking shipyard under the Ministry of Defence. Main activities are construction of warships and submarines with facilities situated at Mumbai and Nhava (under development). They have the capability to build warships, submarines, merchant ships upto 40,000 DWT since 1979.

The business has 2 key operating divisions - Shipbuilding division that undertakes building and repairing of naval ships, whereas Submarine and heavy engineering division includes building, repairing, and refitting of diesel electric submarines. Till 2020, the company has built 795 vessels, including 25 warships, 4 missile boats, 3 submarines, 6 Leander class frigates, 3 Godavari class frigates, 3 Shivalik class frigates, 3 corvettes, and 6 destroyers.

Mazagon Dock shipyard is strategically located on the west coast of India, the sea route that connects Europe, Pacific Rim, and West Asia.

Objects of the Issue:

• To carry out the disinvestment plan of 30,599,017 equity shares by selling shareholders constitutes 15.17% of pre-offer equity share capital
• To achieve the benefits of share listing on the stock exchanges.

Strengths:

• It is the only public sector defense shipyard constructing conventional submarines.
• Mazagon Dock Shipbuilders Limited has world-class infrastructure capable of serving the requirements of the Ministry of Defence.
• Its facilities are located strategically in close proximity to its vendors and customers.
• The company has led to an increase in the indigenization of the vessels and implementation of the “Make in India” campaign.
• It has an experienced board and senior management team with a skillfully trained workforce
  

Verdict:

Another PSU company with unique business and from defense, "Make in India". But don't forget the listing of various other PSU's like HAL, BDL, choshin shipyard, Midhani and many more. I think one should not expect listing gains, for long term portfolio this can be applied.

Sources: Various publications

 

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