India's Pipavav Port makes splashing share debut

Indian port operator Gujarat Pipavav Port yesterday surged 22 percent on debut on the Mumbai stock exchange as investors cheered its Danish pedigree and reasonable valuation, reported Reuters.

Shares of Gujarat Pipavav were trading at US$1.16, about 17 percent higher than the issue price in a firm Mumbai market, easing from a high of $1.26, a 27 percent jump.

The company, run by Danish shipping and oil conglomerate A P Moller-Maersk which owns 43 percent, raised about $107.93 million in its IPO, which was subscribed 19.5 times.

"The company has probably the best credentials and parent in the world," Arun Kejriwal, director of research firm KRIS, said, "A P Moller is today the authority in shipping so the pedigree is excellent."

Gujarat Pipavav had a stellar debut as the offering was reasonably priced, he added.

Gujarat Pipavav plans to use about 60 percent of the proceeds to reduce its debt of $232.06 million, while another $32.38 million will be for expansion projects, managing director Prakash Tulsiani said.

The company is growing faster than the market as container trade grew at 64 percent, outpacing the industry growth of 22 percent in the January-June period, Tulsiani said.

Tulsiani said Gujarat Pipavav is on track to achieve EBITDA margins of about 55 to 60 percent, the industry average.

"Gujarat Pipavav comes off a low base compared to some established ports and to that extent the growth should command a premium," broker Angel Broking said.

Gujarat Pipavav also plans to set up port infrastructure on 405 hectares of land leased from the state government, its chief financial officer Hariharan Iyer said.
(Source:www.cargonewsasia.com)