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Garden Reach Shipbuilders IPO receives tepid response, subscribed 1% on Day 1

NEW DELHI: The initial public offering (IPO) by state-run Garden Reach Shipbuilders and Engineers received tepid response on the first day of the bidding process on Monday.

By 5 pm, the issue received bids for 4,02,720 shares, which were just over 1 per cent of total issue size of 2,92,10,760 shares.

The Kolkata-based mini-ratna company makes warships for Indian Navy and Coastguard. It comes under the Ministry of Defence.

Revenues from warships delivered to the Indian Navy and Coastguard accounted for 90-93 per cent of the total revenues in the past three fiscal years. GRSE has an order book of Rs 20,313 crore, which is equivalent of nearly 13 times its revenues of FY18. The company has firm orders for three P17-A class frigates, 1 ASW corvette, five fast petrol vessels, and four landing crafts. But its revenues had been choppy in the past six years.

Long-term investors could wait for attractive secondary market valuations to emerge instead of buying big-time into the IPO, ET said in a report.

The company does not have immediate earnings triggers; however, it would start booking revenues from three new frigates — medium size warships — from fiscal year 2021, it noted.

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