Mazagon Dock Shipbuilders closes with 19% premium over IPO price, but falls 20% from opening price

State-owned defence major Mazagon Dock Shipbuilders closed off the day's high due to profit-booking at higher levels. The stock gained 19 percent to close at Rs 173 against the issue price of Rs 145 on the BSE, but it was locked in 20 percent lower circuit from its opening price.

It opened strong at Rs 216.25 but remained stayed Rs 200 for the rest of the session.

On the National Stock Exchange, the stock closed in 20 percent lower circuit at Rs 171.95 from its opening price of Rs 214.90 but gained 18.59 percent over the issue price.

"Today shall also be remembered for the tepid 19 percent gain over its issue price as leveraged HNI Investors booked losses for what indeed was a resounding response to the IPO of Mazagon Dock in terms of oversubscription," S Ranganathan, Head of Research at LKP Securities told Moneycontrol.

Mazagon Dock traded with volumes of 35,96,526 equity shares on the BSE and 3,99,29,204 shares on the NSE.

Mazagon Dock Shipbuilders off its listing price: What should investors do?

Amarjeet Maurya, AVP-Mid Caps at Angel Broking had recommended booking profit mainly due to the PSU company, which involves execution risk due to project delays. But any correction in the stock can be a good buying opportunity for long-term investors, he said.

"Going ahead, defence sector's outlook is positive mainly due to government initiative like steps taken to ban (imports of)  101 defence items, which clearly indicates government’s focus on indigenisation to promote and create big opportunities in the Indian defence sector. Going ahead, it would be beneficial for companies like Mazagon Dock," he said.

Mazagon Dock Shipbuilders raised Rs 443 crore through its public issue during September 29-October 1 but as it was an offer for sale, the government has received all issue proceeds.

It is a defence PSU with a maximum capacity of around 40,000 DWT, having an orderbook of over Rs 54,000 crore as of July 2020. It is engaged in the construction and repair of warships and submarines for the Ministry of Defence.