Mazagon Dock Shipbuilders shares surge 9% on solid Q3; healthy order book

MDL's order backlog stands strong at Rs 34,787 crore, while its orders pipeline looks robust in defence ship-building along with opportunities in commercial ship-building, exports and ship-repair

Mazagon Dock share price: Shares of Mazagon Dock Shipbuilders (MDL) rallied 9 per cent to Rs 2,438 after the company’s revenue increased significantly by 33.1 per cent year-on-year (YoY) to Rs 3,143.6 crore in the December 2024 quarter (Q3FY25), led by strong execution.

 

The company’s profit after tax increased by 28.8 per cent YoY and 37.9 per cent quarter-on-quarter (QoQ) to Rs 807 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) climbed 51.5 per cent YoY to Rs 817.10 crore, while margin expanded 317 bps YoY and 747 bps QoQ at 26 per cent.

 

Significant growth in revenues was largely in-line with expectations as execution was expected to remain strong during the quarter as the company is going through a phase of maximum revenue recognition (primarily in contracts like P-75 submarines, P-17A frigates, P-15B destroyers), according to ICICI Securities.

 

 

The company’s order inflows stood at Rs 1,092 crore during the quarter (Rs 7,517 crore in 9MFY25). "Order backlog stands strong at Rs 34, 787 crore (3.06x TTM revenues). Orders pipeline also looks robust in defence ship-building along with opportunities in commercial ship-building, exports and ship-repair," the brokerage firm noted. 

 

However, future growth after FY26E is dependent on on-time awarding of big-ticket contracts like P75(I), three additional Kalvari-class submarines, six P-75 India submarines, next generation destroyers, etc., the brokerage firm said in a note.

 

MDL is principally engaged in building and repairing ships, submarines, various types of vessels and related engineering products for its customers. The company is a Defence Public Sector Undertaking shipyard under the Department of Defence Production, Ministry of Defence (MoD), engaged in the construction and repair of warships and submarines for the Ministry of Defence, for use by the Indian Navy and other vessels for commercial clients.

 

MDL is a strong contender for major future projects of the Indian Navy, the Indian Coast Guard and other overseas clients. Some of the identified major business opportunities where MDL is a strong contender are the five next generation destroyers and Project P75(I) conventional Submarines (six). Further, the company as the lead shipyard for the construction of frontline warships and submarines is a highly potential contender to build warships and submarines envisaged to meet Indian Navy’s acquisition plan.

 

The indigenisation plan of the Indian Navy up to 2015-2030 states that the industry, including the private sector, can play a vital role in parts to meet the sophisticated needs of the armed forces through cost-effective utilisation of its know-how and existing  infrastructure, in pursuance of the Government of India’s (GoI) vision of Make in India.

 

As per the Sagarmala project, coastal and inland waterways traffic is expected to shoot up 15 times over the next 20 years. Similarly, capacity augmentation is expected to result in a five times rise in traffic capacity, from the existing 350 million tonnes. This is expected to bring in additional ship repair business, MDL said in its FY24 annual report.

 

At 12:08 PM, MDL was trading 6 per cent higher at Rs 2,361, as compared to the 0.9 per cent decline in the BSE Sensex. The average trading volumes on the counter jumped three-fold. A combined 8.17 million equity shares had changed hands on the NSE and BSE.