How has been the response to the Mazagon Docks IPO on the first day?
Answer
Answer
On day 1 of the IPO, it must be said that the Mazagon Dock IPO got a very sound response. The issue has already gotten fully subscribed on the first day itself with good response from the retail investors, which shows the strong retail appetite for the stock.
The IPO is open for a period of 3 days till October 01 and has a price band of Rs.135-145 per share. Looking at the initial response, one can expect a good oversubscription by the end of Day-3 so price discovery looks likely at the upper end of the band.
Mazagon Docks is a profit making company in the public sector which has a virtual monopoly status as the only shipyard to build destroyers and conventional submarines for the Indian Navy. In addition, it has a healthy order book position of Rs.55,000 crore.
The other positive is the cheap valuation. At the upper price band at Rs.145 per share, the stock is available at a competitively low P/E of 6.1X. The support of the government, assured order flows and big focus on in-sourcing of defence orders are big positives for Mazagon.