State-run Garden Reach Shipbuilders drops on trading debut
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Garden Reach Shipbuilders & Engineers Ltd made a weak debut on the stock markets on Wednesday as its shares listed at a 12% discount to the initial public offering price.

Shares of the state-run warship maker opened at Rs 104 apiece on the BSE, compared with the IPO price of Rs 118, stock-exchange data showed.

The shares touched a low of Rs 95.35 apiece before closing at Rs 105.10, down 10.93%. The BSE Sensex ended up 1.35%.

Garden Reach is the 23rd company to list on the main board of the stock exchanges in 2018. Twelve of the previous 22 companies had gained on debut.

The tepid debut comes after the company received lukewarm response to its IPO. The share sale crossed the ropes on the fifth day of the issue after Garden Reach became the first state-run company to fail to get enough bids for its IPO during the scheduled three-day sale and extended the offering by three days.

Market sentiment has weakened in recent weeks due to the depreciation of the rupee, rising crude oil prices and fears that non-bank lenders and housing finance companies are facing a cash crunch. The concerns arose after Infrastructure Leasing & Financial Services (IL&FS) defaulted on its debt last month, sparking a sell-off in shares of NBFCs and mortgage lenders.

Garden Reach's IPO was entirely a sale of 29.21 million shares by the government. The government’s stake in the company fell to 74.5% after the share sale from 100%.

The share sale sailed through with help of institutional investors, including state-run banks and insurers. Retail investors and eligible employees stayed away from the IPO despite being eligible to a discount of Rs 5 on the allotment price.

Garden Reach had initially set a price band of Rs 115-118 for the IPO but later cut the lower end to Rs 114. At the upper end, it sought a valuation of about Rs 1,352 crore. It now commands a market capitalisation of Rs 1,203.94 crore.

The company had filed its draft red herring prospectus with the Securities and Exchange Board of India in March. It received SEBI’s approval on 22 May.

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