GARDEN REACH SHIPBUILDERS IPO Review

Garden Reach Shipbuilders IPO comprises Offer for sale (OFS) of up to 2.92 crore equity shares of Rs.10 each by the Government of India (GoI), in the price band of Rs. 115 to Rs. 118 per share. There is a discount of Rs. 5 per share for retail category. The OFS represents 25.50% of the post issue paid-up share capital and the total issue size is Rs. 340 crore at the upper end of the price band.

Issue Period	Mon, Sept 24 – Wed Sept 26,2018
Issue Details	Offer for Sale of 29,210,760 Equity Shares
Issue Size (Rs. Cr)	Rs.330.63~Cr – 339.39 Cr
Price Band	Rs.115 – 118
Retail & Employee Discount	Rs.5/- per Equity Share
Bid Lot	120 Equity Shares and multiple thereof
Issue Structure :
QIB	50% of the Net offer
NIB	15% of the Net offer
Retail	35% of Net offer -Upto 10,023,300 Equity Shares- 113.26 Cr
BRLMs	IDBI Capital, Yes Securities
Registrar	Alankit Assignments Ltd.

About Garden Reach Shipbuilders & Engineers Limited

Garden Reach Shipbuilders & Engineers Limited (“GRSE”) is a Mini Ratna-Category I Company.
The company is engaged in Shipbuilding company and is under the administrative control of the Ministry of Defence.
Garden Reach Shipbuilders & Engineers Limited caters to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard.
GRSE has built and supplied more than 750 vessels to carry men and materials as well as for the surveillance of the coast line.
The company also has a engineering division.
Garden Reach Shipbuilders & Engineers Limited has 3 manufacturing facilities in and around Kolkata

Garden Reach Shipbuilders : Financials

(Rs. In Cr)
Particulars	2018	2017	2016	2015#
Revenue from Operations	1,346.52	929.32	1,664.59	1,568.49
Revenue Growth (%)	44.89%	-44.17%	6.13%	–
EBITDA	164.4	55.89	283.74	123.04
EBITDA Margin (%)	12.21%	6.01%	17.05%	7.84%
Profit Before Tax	127.75	20.12	251.54	90.17
Profit After Tax	86.81	11.47	164.45	51.73
Net Profit Margin	6.45%	1.23%	9.88%	3.30%
Share Capital	114.52	123.84	123.84
EPS (Rs.)	7.14	0.93	13.33	4.25
Reserves	901.39	959.3	1,012.82	882.98
Net Worth@	1,015.94	1,083.14	1,136.66	1,006.82
RoNW (%)	8.54%	1.06%	14.47%	5.14%
Net Asset Value (Rs.)	88.69	87.46	91.78	81.3
Dividend (%)	44.36%	43.68%	42.98%	20.00%
Face Value	10
IPO Price	118
Post issue equity	114.55
Post issue EPS	7.58
PE	15.57
P/BV	1.33
CAGR Sales 3 Yrs	-4.96%
CAGR Net Profit 3 Yrs	18.83%
Market Cap	1351.69
Market cap / Sales	8.22

Garden Reach Shipbuilders IPO: Pros

Garden Reach Shipbuilders & Engineers Limited is a miniratna (Category-I) PSU from 2006 is bagging the Defence Minister’s trophy for Best Performing Shipyard for four consecutive years since FY 2014.
The company has undertaken major modernization of its infrastructure. Its facilities allow the company to concurrently. produce eight (8) large ships and twelve (12) medium/ small ships.
Garden Reach Shipbuilders currently has contracts to deliver 20 ships to the Indian Navy and Indian Coast Guard. So far it has delivered 10 ships.
Garden Reach Shipbuilders & Engineers Limited has a good order book of Rs. 20,314 crore . The majority of this for three ships for the Indian Navy, aggregating to Rs. 19,300 crore,.
It has a dedicated Central Design Office (“CDO”) undertaking design and research and development, which comprises of highly skilled workforce of 74 members as on date

Garden Reach Shipbuilders IPO: Risks

The company is revenue depend completely on the defense projects mainly from the government.
PSUs stocks have poor growth in the past.

Garden Reach Shipbuilders IPO: Assessment

Garden Reach Shipbuilders & Engineers Limited has large order for 3 ships to be delivered to Indian Navy in 2024. These orders may take some time to contribute to the bottom line.
In the past, company’s financial performance has been average to lackluster. Though now it has good orders in hand, revenue uptick may take some time.
Garden reach Shipbuilders have long-standing relationships with the Indian Navy and Indian Coast Guard. T
Cochin Shipyard (CS), a PSU is currently trading at around P/E of 13 times its FY 2018 earning.
There is low appetite for PSU stocks. Further with bearish secondary market chances of making a listing gain are low.,
At post issue P/E of around 16 the company’s valuations offer little comfort. I do not intend to apply in the Garden Reach Shipbuilders IPO.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.