IPO that has gathered much of the interest of investors this quarter is of Cochin Shipyard. Cochin Shipyard is a shipbuilding and maintenance company incorporated in 1972. Company has its majority revenue source from defence sector and has minority share from commercial works.
At the upper end of the price band, the IPO size works out to Rs 1,468 crore and would give valuation of Rs.5,870 crore to the company. Cochin shipyard had reported revenue of Rs.2,070 crore with profit of Rs.312 crore for the FY2017. In FY17 its order book stood at Rs.3,339 crore including shipbuilding orders worth Rs.2,936 crore and ship repair orders worth Rs.403 crore.
Now the point is that should a investor hold this stock for long-term or book profit at IPO listing day. The kind of response that subscribers and analyst have gave to IPO, i think listing would probably the good one or may be a bumper also. For long-term prospective, i would definitely give a bullish call on IPO because of the future of Defence sector.
Recently, i posted a post on defence sector and its future and adviced to buy selective stocks from sector. However in following IPO, i would advice to book some of your profit (around 1/4) from listing and hold remaining portion for long-term.
Security and Intelligence Services
SIS or Security and Intelligence Services is the second largest security services provider in India. Company has bring its IPO for collecting around Rs.780 crore to pay off loansworth Rs 200 crore and fund its working capital requirements. SIS has priced the issue in a band of Rs 805-Rs 815. Post this issue, promoter stake will come down to 65.2 per cent from 76.9 per cent and will give a valuation of around Rs.6000 crore to the company. For the financial year 2016-17, company reported a total revenue of Rs.4,567 with profit of Rs.91 crore.
Comparatively, Cochin shipyard can perform better than SIS on listing day because of valuations and future potential. In SIS, i don’t have a extreme bullish call but have a hold advice. In short-term after listing, i don’t think that stock would perform great. While i think SIS may give some good returns in long-term. Therefore, i would advice to book full or 3/4 of your profit from IPO listing and may continue to hold remain 25 percent for long-term.
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