Gujarat Pipavav Port IPO Review

Gujarat Pipavav Port which has developed and operates APM Terminals Pipavav, is coming out a public issue of 1.1 crore shares in the price band at Rs 42-48/share. The company promoted by APM Terminals Mauritius, has multi-cargo and multi-user operations. Other major shareholders include IDBI Bank and IDBI Trusteeship services.

Details of the issue:

Issue Open: Aug 23, 2010 - Aug 26, 2010.
Face Value: Rs. 10 Per Equity Share.
Issue Price: Rs. 42 - Rs. 48 Per Equity Share.
Listing At: BSE, NSE.

Fundamental Details:

The majority of the proceeds of this IPO will be used towards repayment of loan of about Rs.300 crs. By doing this the Debt/Equity of the company is expected to significantly reduce from 4.7x in September 2009 to 0.9x in CY12. The reduction in interest costs will help improve the profit margins significantly.

Currently the Book Value of the company is Rs.10 and at a price of Rs.48, the issue is done at 5 times the Book Value, which is expensive. Though there would be listing gains,due to positive market sentiment, long-term investors can wait before committing funds.