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Why We Have Love for PSU IPOs - Views on News from Equitymaster
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The Equitymaster Research Digest

Why We Have Love for PSU IPOs
Aug 2, 2017

  • Does the latest PSU IPO tick all the right boxes?
  • Record high cash levels in Microcap Millionaires
  • Who is the Equitymaster Insider?

We don't have a great reputation when it comes to recommending IPOs. And for good reason.

Some of them are priced so egregiously the IPO price already reflects growth for the next five years.

And then there are stocks with steep valuations and shaky business models.

Ticking time bombs.

Fair to say, out of ten IPOs we cover, we recommend applying to maybe three.

And They're All PSU IPOs...

However, Cochin Shipyard Limited, an open IPO, is a PSU. And we haven't been so stingy with PSU IPOs.

We've recommended applying to nearly 60% of all the PSUs IPOs/FPOs we've covered since 2009. That's a 60% recommendation rate compared to just 30% overall.

And Cochin Shipyard's business model ticks all the right boxes. In a difficult industry, the company's performance is commendable.

Sample this. Twenty-seven private shipyards in India are reeling under massive losses due to a mountain of debt and lack of work.

Even international players - the Big Three, Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering (DSME) - are incurring losses. In fact, DSME, the world's second-largest shipbuilder by revenue, is facing bankruptcy.

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