Mazagon Dock Shipbuilders is planning to launch its maiden public offer later this month, said a senior company official. Mazagon Dock IPO is likely to mobilize INR500 – 600 crore (INR5 – 6 billion) through the share sale by the government of India. The company has already started roadshows for the IPO and the red herring prospectus will be filed in the coming weeks.
The company filed draft prospectus with SEBI in March last year and received regulatory approval in August.
Mazagon Dock IPO: Full OFS, government to dilute shareholding
Operating under the Ministry Of Defence, Mazagon Dock Shipbuilders is fully owned by the government through the President of India. Through Mazagon Dock IPO, the government plans to pare its equity stake in the company by 22,410,000 shares or 10% of its stake. The move is part of the government’s strategy to rake in as much as INR80,000 crore through stake sales in public sector undertakings (PSUs).
Since there is no sale of fresh shares, the company will not get any proceeds from the IPO.
Mazagon Dock IPO: Warships and submarines for India Navy
The Mumbai-based company is engaged in the construction and repair of warships and submarines for the Ministry Of Defence for use by the Indian Navy and other vessels for commercial clients. Mazagon Dock Shipbuilders was conferred with the ‘Mini-ratna-I’ status in 2006. The company has been profitable in each of the last three years and has a robust order book from the ministry.
As of 28 February 2018, its order book stood at INR52,760.8 crore comprising of building and construction of four ‘P-15B’ destroyers, four ‘P-17A’ stealth frigates and five Scorpene class submarines for the Indian Navy.
Mazagon Dock Shipyard IPO has the potential to boost the prevailing poor sentiment in the primary market, provided the government comes up with a winning price for the offer. Investors trust in PSU IPOs got shaken last year following poor listings of Garden Reach Shipbuilders and IRCON International.
Apart from Mazagon Dock Shipyard, the government has lined up several others IPOs. In a related development, mini ratna MSTC also filed its draft prospectus with SEBI, seeking approval to launch its IPO. As such, it will only serve the government’s purpose to keep pricing of the upcoming IPOs reasonable.