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    Bharat Dynamics IPO overall subscribed 1.30 times

    Synopsis

    The price band of the issue has been fixed between Rs 413 and Rs 428 a share.

    ThinkStock Photos
    The price band of the issue has been fixed between Rs 413 and Rs 428 a share.

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    NEW DELHI: The initial public offering (IPO) of defence firm got 1.30 times subscription on the last day of bidding on Thursday.

    The total bids stood at 2,92,42,115 shares against the total issue size of 2,24,51,953 shares, NSE data showed.

    The category set aside for qualified institutional buyers (QIBs) was oversubscribed 1.50 times, non-institutional investors 50 per cent and retail investors 1.41 times, merchant banking sources said.

    Bharat Dynamics is the first missile manufacturer in India to list its stock. Hence, some investors say it may attract a scarcity premium. As this is an offer for sale by the government of India, the entire proceeds from the IPO will add to the divestment kitty.

    With an order book of Rs 10,543 crore, the missile maker is likely to gain from the government’s New Defence Procurement Policy (DPP) 2016 Make in India. But delays in awarding of contracts and postponement in the company’s foray into international markets will be a key overhang.

    At the higher end of the price band, the issue is priced at post-dilution P/E of 16 times on FY17 basis and 22.7 times on H1FY18 annualised basis.

    “At this valuation, the issue seems reasonably priced. The opportunities that are expected to arise in the defence space, given the government's focus, along with upcoming orders from the Akash Weapon System and need for equipment modernisation are likely to be positive for BDL,” said Centrum Broking.

    Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, is bullish on defence sector.

    "Defence is a very interesting space and investors got little carried away when this Make in India for defence started. Lot of companies bagged orders and people rushed to buy shares of those companies. But one must remember that a defence project from the time it starts delivering revenue and profit takes quite a lot of time. There is no short fix for these things. So, one has to be careful in defence," he said.
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    2 Comments on this Story

    jayant prabhu1086 days ago
    u people missed the bus. this is a real mulltibagger
    Cyboy 1086 days ago
    So it is undersubscribed. This will mean the govt forcing LIC & their kind to buy up all these unsold shares? I just hope they don''t force EPFO & NPS fund managers too.
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