Incorporated in Bombay in the year 1934, Mazagon is coming up with IPO of 30,599,017 equity shares of face value of Rs 10 each amounting to Rs 444 crore. It is purely an offer for sale and the company would not receive any proceeds from the issue.
The offer includes 345,517 equity shares reserved for eligible employees.
Financial performance of Mazagon Dock has remained strong with increasing trend seen in the revenues. Revenues for FY20 has increased to Rs 5535 crore from Rs 5204 crore in FY19. Though volatility is seen in the bottomline with variations in PAT and EBITDA on YoY basis. PAT has reduced by 10% to Rs 458.01 crore in FY20 as against Rs 513.01 crore in FY19 because of increased employee benefit expenses and subcontracting expenses. Operating and net margins are reasonable at 14.92% and 8.27% in FY20 and FY19 respectively. RoNW is 14.92% in FY20.
|Cash flow from operating activities||-95.57||65.24||490.77||-1002.71|
|Cash and cash equivalents||5798.18||7469.70||7189.59||8362.88|
The peers of Mazagon include Cochin shipyard (P/E,7.6), Reliance Naval and engineering (NA) and Garden reach Shipbuilders and Engineers Limited (P/E, 14.91). The P/E at upper band of the issue price comes at 6.78 which is low when compared to average industry P/E of 11.25 which makes the issue attractively priced. At NAV of Rs 152.17 in FY20, P/BV comes at 0.95. Looking at good valuations and reasonable financial performance, investors may subscribe for long term.
Review By CA Priyanka Choudhary on 18th Sep 2020
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About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.