Bharat Dynamics IPO opens at Rs 413-428 a share: Should you subscribe?

Representative Image (Photo: Shutterstock)State-owned Bharat Dynamics has opened its initial public offering for subscription on Tuesday, with a price band of Rs 413-428 per share. The IPO of 22,451,953 equity shares is an an offer for sale by the promoter, The President of India, acting through the Ministry of Defence. The company has reserved a portion of 458,203 equity shares for allotment to eligible employees. The issue will close on March 15. Employees and retail investors will get shares at a discount of Rs 10 per share on offer price. The bids can be made for a minimum lot of 35 equity shares and in multiples of 35 shares thereafter. Equity shares are proposed to be listed on the BSE and the National Stock Exchange (NSE). The book running lead managers to the offer are SBI Capital Markets, IDBI Capital Markets & Securities and YES Securities (India). The company aims to raise Rs 927.27 crore at lower end of price band and Rs 960.94 crore at higher band through the issue. Should you subscribe? Here’s what brokerages say: Geojit Financial Services Bharat Dynamic’s focus on increase in indigenisation of products, strong focus on R&D and exports is expected to boost revenue visibility and profitability going forward. BDL’s ability to efficiently produce, deliver the products and services in a timely manner makes them stand out of the crowd. At an upper price band of Rs428, BDL is available at a reasonable valuation of 16x on FY17 EPS. As Indian defence industry is poised for growth, we recommend ‘Subscribe’ to the issue, with a long term perspective. Centrum Broking At the higher end of the price band of Rs428, the issue is priced at P/E of 16x (post dilution) on FY17 and 22.7x on H1FY18 (annualized) basis.

Source: Business Standard