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Garden Reach Shipbuilders makes a weak debut, settles 13% below issue price

SI Reporter/Mumbai 10 Oct 18 | 10:26 AM

India's second scorpene class submarine Khanderi launched at Mazagon dock shipbuilders limited (mdl) in Mumbai. Photo: PTI

Shares of Garden Reach Shipbuilders & Engineers (GRSE) made a weak debut on Wednesday settling at Rs 102.65 per share, down 13% below its issue price of Rs 118 on the National Stock Exchange (NSE). It settled at Rs 105.10 on the BSE, a 10.9% lower against issue price.

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The stock had touched a high of Rs 109 and a low of Rs 95 on both the exchanges during the day.

The company's Rs 3.45 billion initial public offer (IPO) ran from September 24-October 1 as the issue closure date was extended.

The IPO got a lukewarm response, was subscribed just 1.02 times, largely supported by qualified institutional buyers (QIBs). QIBs reserved portion was subscribed 1.81 times, while non-institutional investors (NIIs) and retail individual investors (RIIs) reserved portion was subscribed by only 0.31% and 0.24%, respectively.

GRSE is a ship building company under the administrative control of the Defence Ministry. It has also built India's first indigenous warship -- the INS Ajay -- in 1961, as per the company's website.

The Company has a strong order book of Rs 203 billion, comprising gross order value in shipbuilding segment, engineering segment and engine segment. The total value of order book represents the value of contracts that have not been completed. The current order book provides the company with deep pool of revenue generating projects which allows the company to invest in its design capabilities and facilities to become more efficient and technology sophisticated.

The current contract with the Indian Navy and Coast Guard is to deliver 20 ships out of which the company has already delivered 7 ships. GRSE has also been declared lowest bidder for 4 survey vessels, 8 Anti-Submarine warfare craft and 1 Ocean going passenger and cargo ferry and these order are not a part of order book as the letter of award is still pending.

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