Mishra Dhatu Nigam lists 3% below issue price; ends flat

The stock listed at Rs 87, a 3.3% lower against issue price of Rs 90 on the National Stock Exchange and the BSE

Mishra Dhatu Nigam (MDNL) has made a weak debut by listing at Rs 87, a 3.3% lower against issue price of Rs 90 on the National Stock Exchange (NSE) and the BSE (Bombay Stock Exchange). However, the stock moved higher to Rs 90.90 after its listing.

It ended flat at Rs 90 on the NSE. A combined 3.6 million shares changed hands on the counter on the NSE and BSE so far.

The Rs 4,384 million initial public offer (IPO) of MDNL was subscribed 1.21 times. The IPO received bids for 59 million shares against offered of 48.7 million, data on the BSE website showed.

The qualified institutional buyers (QIBs) category of the IPO was subscribed1.95 times and retail individual investors (RIIs) category was subscribed 0.72 times and of non institutional investor’s category by merely 0.12 times, data showed.

The objects of the offer are to carry out the disinvestment of 48.7 million equity shares by the selling shareholder constituting 26% of company's pre-offer paid up equity share capital and to achieve the benefits of listing the equity shares on the stock exchanges.

The company will not receive any proceeds from the offer and all proceeds shall go to the selling shareholder. Government of India will hold 74% of total paid up equity share capital of the company post listing.

MDNL is one of the leading manufacturers of special steels, superalloys and only manufacturer of titanium alloys in India. These are high value products which cater to niche end user segments such as defence, space and power.

The issue seems to be attractively priced considering its strategic importance, monopoly position in some of its products, virtually debt free operations and healthy financial performance. MDNL has not reported a decline in the revenue in the last 14 years.
However, due to the shutdown of one of its hot press (to carry out repair & modernization works), this year (i.e. FY18) it is likely to report a drop in the business. Nevertheless, with the restart in the press in FY19, the company is once again expected to have normal operations, Choice Broking said in an IPO note.