Cochin Shipyard surges 21% against issue price after a tepid debut

The stock moved higher to Rs 528, after listing at Rs 440 on NSE, against its IPO price of Rs 432.

Cochin Shipyard moved to Rs 528 on the National Stock Exchange (NSE), a 22% premium against its issue price of Rs 432 offered to qualified institutional buyers (QIBs) and non-institutional investors (NIIs). The retail investors and employees were offered shares at a price of Rs 411, a discount of Rs 21 per equity share.

The stock made a tepid debut on the bourses by listing at Rs 440, a marginal 2% rise against its issue price.

On the BSE, the stock was locked in upper circuit of Rs 522, up 21% against its IPO price after making a debut at Rs 435. A combined 12.7 million shares have changed hands on the counter on NSE and BSE till 10:07 am.

Analysts advised to stay invested in the stock for the long-term, but suggested those willing to make quick listing gains, to book profits on these levels. 

“Retail investors largely earn quick returns by listing gains. Considering the bearish sentiment in the market, and a decent run-up of over 20% on the stock, it is better to take profits on these levels. However, investors with a long-time horizon can hold on to the stock as fundamentals of the company are strong and there is no other comparable listed firm of this size in the shipbuilding industry,” Saurabh Jain, Associate Vice President - Research (Equity) of SMC Global Securities said.

Rakesh Tarway, Head of Research at Reliance Securities shared similar views. 

“I’ll advise investors to remain invested if they have intentions to hold the stock for long-term of 12-24 months. However, it’s an attractive exit point for those who bought only for listing gains, he said.  

The initial public offer (IPO) of Cochin Shipyard had received a stellar response from investors. It was oversubscribed 76.19 times. The portion reserved for QIBs was oversubscribed 63.52 times, NIIs 288.87 times and retail investors 8.51 times.

The IPO of Rs 1,468 crore of public sector unit Cochin Shipyard was in a price band of Rs 424-432.

“Cochin Shipyard, the largest public-sector shipyard in India in dock capacity, caters to both defence and commercial segments. It’s perfectly poised to capitalize on the government’s focus on ‘Make in India’ campaign in the domestic defence sector. The government’s plan to develop inland waterways in India unfolds another huge opportunity. The IPO provides good retail exposure to the promising domestic defence sector, and available at attractive valuations of 18.1x FY17 P/E (upper band of Rs.432),” IIFL Wealth Management said in an IPO note on the company.