Garden Reach Shipbuilders ipo

Garden Reach Shipbuilders IPO comprises Offer for sale (OFS) of up to 2.92 crore equity shares of Rs.10 each by the Government of India (GoI), in the price band of Rs. 115 to Rs. 118 per share. There is a discount of Rs. 5 per share for retail category. The OFS represents 25.50% of the post issue paid-up share capital and the total issue size is Rs. 340 crore at the upper end of the price band.

Issue PeriodMon, Sept 24 – Wed Sept 26,2018
Issue DetailsOffer for Sale of 29,210,760 Equity Shares
Issue Size (Rs. Cr)Rs.330.63~Cr – 339.39 Cr
Price BandRs.115 – 118
Retail & Employee DiscountRs.5/- per Equity Share
Bid Lot120 Equity Shares and multiple thereof
Issue Structure : 
QIB50% of the Net offer 
NIB15% of the Net offer 
Retail35% of Net offer -Upto  10,023,300 Equity Shares-  113.26 Cr
BRLMsIDBI Capital, Yes Securities
RegistrarAlankit Assignments Ltd.
About Garden Reach Shipbuilders & Engineers Limited
    • Garden Reach Shipbuilders & Engineers Limited (“GRSE”) is a Mini Ratna-Category I Company.
    • The company is engaged in Shipbuilding company and is under the administrative control of the Ministry of Defence.
    • Garden Reach Shipbuilders & Engineers Limited caters to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard.
    • GRSE has built and supplied more than 750 vessels to carry men and materials as well as for the surveillance of the coast line.
    • The company also has a engineering division.
    • Garden Reach Shipbuilders & Engineers Limited has  3 manufacturing facilities in and around Kolkata

Garden Reach Shipbuilders : Financials

 (Rs. In Cr)
Particulars2018201720162015#
Revenue from Operations1,346.52929.321,664.591,568.49
Revenue Growth (%)44.89%-44.17%6.13%
EBITDA164.455.89283.74123.04
EBITDA Margin (%)12.21%6.01%17.05%7.84%
Profit Before Tax127.7520.12251.5490.17
Profit After Tax86.8111.47164.4551.73
Net Profit Margin6.45%1.23%9.88%3.30%
Share Capital114.52123.84123.84 
EPS (Rs.)7.140.9313.334.25
Reserves901.39959.31,012.82882.98
Net [email protected]1,015.941,083.141,136.661,006.82
RoNW (%)8.54%1.06%14.47%5.14%
Net Asset Value (Rs.)88.6987.4691.7881.3
Dividend (%)44.36%43.68%42.98%20.00%
Face Value10
IPO Price118
Post issue equity 114.55
Post issue EPS7.58
PE 15.57
P/BV1.33
CAGR Sales 3 Yrs-4.96%
CAGR Net Profit 3 Yrs18.83%
Market Cap1351.69
Market cap / Sales8.22

 

Garden Reach Shipbuilders IPO: Pros
      • Garden Reach Shipbuilders & Engineers Limited is a miniratna (Category-I) PSU from 2006 is bagging the Defence Minister’s trophy for Best Performing Shipyard for four consecutive years since FY 2014.
      • The company has undertaken major modernization of its  infrastructure. Its facilities allow the company to concurrently. produce eight (8) large ships and twelve (12) medium/ small ships. 
      • Garden Reach Shipbuilders currently has contracts to deliver 20 ships to the Indian Navy and Indian Coast Guard. So far it has delivered 10 ships.
      • Garden Reach Shipbuilders & Engineers Limited   has a good order book of Rs. 20,314 crore . The majority of this for three ships for the Indian Navy, aggregating  to Rs. 19,300 crore,.
      • It has a dedicated Central Design Office (“CDO”) undertaking design and research and development, which comprises of highly skilled workforce of 74 members as on date
Garden Reach Shipbuilders IPO: Risks
      • The company is revenue depend completely on the defense projects mainly from the government.
      • PSUs stocks have poor growth in the past.
Garden Reach Shipbuilders IPO: Assessment
      • Garden Reach Shipbuilders & Engineers Limited has large order for 3 ships to be delivered to Indian Navy in 2024. These orders may take some time to contribute to the bottom line.
      • In the past, company’s financial performance has been average to lackluster. Though now it has good orders in hand, revenue uptick  may take some time.
      • Garden reach Shipbuilders have long-standing relationships with the Indian Navy and Indian Coast Guard. T
      • Cochin Shipyard (CS), a PSU is currently trading at around P/E of 13 times its FY 2018 earning.
      • There is low appetite for PSU stocks. Further with bearish secondary market  chances of making a  listing gain are low., 
      • At post issue P/E of around 16 the company’s valuations offer little comfort.  I do not intend to apply in the Garden Reach Shipbuilders IPO.
Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.