SMC Capital Equity Head, Mr Jagannadham Thunuguntla speaking about the muted debut of Pipavav listing

1. OCTOBER 9, 2009
Pipavav Shipyard in Muted Debut; Prospects Tied to Orders
MUMBAI -- India's Pipavav Shipyard Ltd. Friday made a muted debut on the stock exchanges, suggesting
that investor sentiment for new share sales is still lukewarm.
The shares of the ship building, repair and fabrication company opened at 60.20 rupees ($1.30), 3.8%
above the offer price of 58 rupees. However, they closed trading 2.1% down at 56.80 rupees, with volume
of 50.39 million shares on the Bombay Stock Exchange. The exchange's benchmark index ended down
1.2%.
"The opening was along expected lines but the stock has slipped a bit. The company has begun
operations in earnest only this financial year and orders should begin flowing in about six months," said
National Stock Exchange member S.P. Tulsian.
He said the company's shares could rise between 20% and 30% after six months once it starts getting
more orders.
The Pipavav shipyard is located on India's west coast, adjacent to major sea lanes between the Persian
Gulf and Asia. The company builds and repairs ships, and constructs offshore platforms, rigs, jackets and
vessels for oil and gas companies.
Pipavav Chairman Nikhil Gandhi Friday said on the CNBC-TV18 television channel he expected revenue
of 8 billion rupees to 10 billion rupees for the fiscal year that began April 1.
He said the company is in the process of bidding for some projects of national and international defense
agencies. Pipavav Shipyard has already bid for tenders worth 75 billion rupees from Indian Navy, he
added.
Mumbai-based brokerage Angel Broking said in a note that Pipavav Shipyard is banking on the strong
capital expenditure planned in the defense sector (400 billion rupees) and the naval sector (206 billion
rupees).
"The company intends to leverage on co-promoter Punj Lloyd's offshore business in India, which will
enhance its pre-qualification for other fabrication and construction of offshore platforms," the note added.
Pipavav is co-owned by Punj Lloyd Ltd. and SKIL Infrastructure Ltd. Punj Lloyd provides design,
engineering, procurement, construction and project management services in energy and infrastructure
sectors.
Angel broking added that Pipavav's shares are expensive compared to peers ABG Shipyard and Bharati
Shipyard, "which have a diversified order book with strong revenue and operating visibility over the next
two-three years and higher return ratios."
The Pipavav IPO comes at a time when the Indian primary markets have revived after a 15-month lull
through June following the global credit crisis.

2. Indian companies have already raised over 130 billion rupees in the past three months via IPOs,
according to SMC Capitals.
Pipavav raised 4.96 billion rupees by selling over 85.45 million shares to construct facilities for
shipbuilding, repair and the offshore business.