October 5, 2020


By Roy

Mazagon Dock Shipbuilders came up with their IPO and there was quite a frenzy about it in the primary market. It received huge applications and IPO issue was overall over-subscribed by 157.41 times. I have given a strong subscription call in this IPO. You can check out my post here.

Check Mazagon Dockyard Ltd (MDL) IPO allotment status here.

As on 2nd October Grey Market Premium (GMP) of Mazagon Dock is at 120-140 which is indicating at approx 100% listing gains.

Now let us analyse what could be the minimum listing gains for Mazagon Dock in the worst-case scenario.

Here is the detailed subscription list of the IPO

The bidding was closed on 1st October and the Unblocking of Funds will happen on 8th October. So, funds will be blocked for 7 days. Now let us assume that any HNI has gone to market to raise fund to invest in the IPO. There are many Financials institutions that give short terms loans for 7 days to HNIs. As these loans are not secured in nature, Fin institutes charge approx 5% (As per current market conditions) from HNIs.

HNI quota was oversubscribed by 678.88 times. So, in order to get one lot, HNI has to bid for minimum 678.88 lots. One lot of Mazagon IPO will cost Rs. 14935 (The upper band of Rs. 145 and Lot size 103). So, for a single lot, HNI has to bid Rs. 14935*678.88 = Rs. 1, 01, 39, 073. Bid of more than Rs. 1 crore will fetch him a single lot of subscription.

On that amount he has to pay 5% interest. His interest amount for 7 days will be 10139073*5%/365*7= Rs. 9722.40. So, IPO must list above 14935+9722.40=24657.40 which is approx Rs. 240 per share for him to make a break-even deal. So, the minimum listing gains would be 65.10%.

As per the cues we are getting from GMP, Mazagon IPO is on its way to list with 100%  gains.

Disclaimer – I have applied in the IPO. This post is in continuation of my previous post. You can find my previous post here.

Check your Mazagon Dock IPO allotment status http://ipo.alankit.com/