Bharat Dynamics has tepid listing

PSU defence stock, Bharat Dynamics had a tepid listing today. As against the IPO price of Rs.428, it got listed on the BSE at Rs.360, a discount of almost 16%.

The IPO, which was a part of the Govt’s disinvestment process, was oversubscribed 1.30 times.

In our New Issue Analysis, we had clearly stated that it was good only for the long term. In the analysis, we had said, “Company has the old world charm of a PSU (3% dividend yield + sovereign trust), coupled with enormous potential indigenous defence companies hold. However, short term triggers depend on H2FY18 financial performance. Hence, those considering the IPO with a short term view may give it a miss. However, since defence sector holds a lot of potential, it will be incorrect to rule out this company ab initio. And for long term investors, we advise to consider the IPO.”