India's Garden Reach Shipbuilders and Engineers saw its shares drop 12% on the first day of trading since its IPO.
The stock was down at INR 104 ($1.40) on the Bombay Stock Exchange, while the upper end of its issue price was INR 118.
On the National Stock Exchange, the stock listed at INR 102.50.
The IPO met with what Indian media described as a "tepid" response last month.
It had to extend the offer period to 1 October as a result of weak subscription levels, but it eventually ended up slightly over-subscribed.
The government sold 25.5% of its stake.
The yard is best known for naval and coast guard orders, but has built merchant vessels.
It was following a well-worn path for Indian shipbuilders in recent months.
Cochin Shipyard carried out a successful IPO last year, while Mazagon Dock and Goa Shipyard are also lining up IPOs.
