Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd
Today Mazagon Dock Shipbuilders issue has opened & fully subscribed (1.4 times) on 1st day (3.30pm as per BSE website). We have subscribed rating on IPO mainly due to lower PE valuation to 6.1x FY20 earnings (at the upper end of the issue price band) compare to its peer like Garden Reach Shipbuilders and Cochin Shipyard (trading at 12.2x and 6.6x of its FY20 earnings, respectively). Further, MDSL has healthy ROE of ~16% coupled with highest dividend yield (7.4%) and higher cash on balance sheet among its peers.
Mazagon Dock is primarily engaged in constructing and repairing warships and submarines for MoD and other types of vessels i.e. cargo ships, multipurpose support vessels, barges and border outposts, tugs, dredgers, water tankers, etc. for commercial clients.