After the launch of Salasar Techno Engineering IPO, the new issue investors are eagerly waiting for another public issue: Cochin Shipyard Limited IPO. Though in between in the month of July a series of SME issues are hitting the market still this is only the issue that is going to be listed in the regular exchanges. I will be doing my Cochin Shipyard Limited IPO review with my pros and cons analysis for the investors.
The Cochin Shipyard Limited IPO:
- The issue opens: August 1, 2017
- The issue closes: August 3, 2017
- Offer price: Rs. 424 to Rs. 432 per equity share
- Issue size (in crores): 1440.92 – 1468.11
- Issue type: Book building issue
- Listing Exchange: Bombay Stock Exchange, National Stock Exchange
- Issue prospectus: CLICK HERE
- Issue Registrar: Link Intime India (P) Ltd
Cochin Shipyard Limited IPO Objectives:
- Setting up of a new DRY DOCK inside the existing premises.
- Setting up of an international ship repair facility (ISRF).
- General corporate expenses.
About The Company:
Cochin Shipyard Limited is having their head office in Perumanoor, Kochi, Kerala. The promoter of the company is the President of India who is actually acting through the Ministry of Shipping. The promoter is holding a total of 11,32,80,000 equity shares at Rs. 10, of which the company is disinvesting 20% through this Cochin Shipyard IPO.
The company has been incorporated in the year 1972 and was promoted as a public limited company after 10 years of operation, i.e. on 1982. It has again been converted to a private limited company after 3 years. Finally on November 8th, 2016 it has been again converted into a public limited company.
The company is engaged in shipbuilding, ship repair and marine engineering training. On the daily operations, the company is headed by Shri Madhu S Nair who is the Chairman & Managing Director of the company.
The company has a part track record of negative cash flow and in the draft prospectus, they have clearly mentioned that the negative cash flow can again be repeated. Check the image below:
Now let’s take a look in the profit versus turnover data for Cochin Shipyard Limited. From the image below it has been noted that the companies profitability has seen a serious drop in the financial year 2015.
Cochin Shipyard Limited IPO Review:
Being a Government company disinvestment is on the way. Historically investing in state-owned companies has given good returns to the investors (HUDCO IPO is a recent example). Also already the grey market premium is quoting at 120-125 rupees. We suggest investors apply in this IPO for a medium to long term perspective.