FII develops cold feet over Pipavav Shipyard

The decision by a leading FII brokerage to assign a sell rating to the stock of a recently-listed company has taken the market by surprise.
Market participants closely tracking the developments in the company find it hard to believe that the ‘sell’ recommendation has come from the very broking house which also acted as one of the lead managers for the company’s IPO.
The company in question is Pipavav Shipyard which had come out with an IPO at Rs 58 per share in October this year. The stock has been hovering close to the offer price with no major upward movement since its listing, and closed at Rs 58.50 on Wednesday.
The FII appears quite bearish on the stock, as it feels factors such as uncertainties relating to the greenfield nature of the yard, the long capacity ramp-up period and volatility in the global shipbuilding industry will not augur well for the company. Perhaps a case of true “arm’s length” between the broking and investment banking divisions.