Mazagon Dock IPO gets oversubscribed on Day 1

The initial public offering of ship builder Mazagon Dock Shipbuilders Limited (MDL) saw a strong demand from retail investors, with the issue getting oversubscribed.

"The MDL IPO issue has been over subscribed more than two times on the first day itself," secretary of department of investment and public asset management (DIPAM) Tuhin Kanta Pandey said Tuesday.

"Strong demand seen from retail investors on day one and similar demand expected from the other categories in the coming days," he added.

The first public sector enterprise to be listed in 2020 opened on Tuesday and will close on October 1.

The government is selling 15.17% of Mazagon Dock Shipbuilders stake in the shipyard which received the 'Miniratna' status in 2006. Shares are being offered at in the price band of Rs 135-145 per share.

YES Securities, Axis Capital, Edelweiss Financial, IDFC Securities and JM Financial are the managers to the offer.

The company has built destroyers and conventional submarines for the Indian Navy, and has a strong order book of over ₹54,074 crore with supplies to ministry of defence and the Indian Coastal Guard.

The disinvestment of the public sector enterprise through offer for sale follows others that have taken the same route this year. The government closed a 15% stake sale in aerospace and defence company Hindustan Aeronautics (HAL) via offer for sale for Rs 5,000 crore. The OFS was fully subscribed. It plans to sell 10% stake in Mishra Dhatu Nigam (MIDHANI) for around Rs 400 crore and has sought bids from merchant bankers for selling part of its 87.40% stake, again through OFS, in Indian Railway Catering and Tourism Corp (IRCTC).

The government has set a disinvestment target of Rs 2.10 lakh crore for FY 2020-21. Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions.

The target has remain unchanged despite the Covid 19 pandemic impacting interest of investors in strategic sales of central public sector enterprises including BPCL, Air India, Concor, Shipping Corporation of India. The government has extended deadlines of expression of interest for Air India and BPCL several times this year.