Shares of state-owned Mazagon Dock Shipbuilders (MDSL) have been on a roll, delivering more than five-fold returns to its shareholders in the last one year, thanks to a strong order book, robust earnings, as well as its dominance in the defence sector as the main warship builder, and manufacturer of submarines, and destroyers in India for the Indian Navy.
On Friday, Mazagon Dock shares touched a fresh all-time high, a day after the warships and submarines manufacturer informed the exchanges that it has signed the Master Ship Repair Agreement (MSRA) with the U.S. government represented by NAVSUP Fleet Logistics Center (FLC) Yokosuka. “This is a non-financial agreement. There are only two shipyards in the country including Mazagon Dock which has signed MSRA. The agreement is expected to open up voyage repairs of U.S. Navy Ships at Mazagon Dock,” it said in a BSE filing on Thursday.
The share price of Mazagon Dock has rallied 457% in the last one year after hitting a 52-week low of ₹403.50 on September 8, 2022. The PSU stock, which made its debut on the stock exchanges in October 2020, has risen 190% in the calendar year 2023, while it jumped over 207% in the past six months. The stock has given a whopping 1,256% return since its listing on October 12, 2020.
Early today, Mazagon Dock opened higher for the second straight session at ₹2,176, up 4.2% against the previous closing price of ₹2,087.75 on the BSE. Extending opening gains, the stock gained as much as 18.9% to hit a new lifetime high of ₹2,483, while the market capitalisation climbed to ₹48,748 crore. On the volume front, over 4 lakh shares changed hands over the counter as compared to two-week average volume of 1 lakh stocks.
Domestic brokerage ICICI Securities in a latest report said that Mazagon Dock is in a race to win a submarine tender of the Indian Navy. In June this year, the company signed an agreement with German shipbuilder ThyssenKrupp Marine Systems (TKMS) to jointly bid for P-75I, which envisaged the construction of six advanced submarines in India at cost of over ₹45,000 crore.
“After South Korea’s Hanwah Ocean withdrawing from the race, a strong two-way contest is in the offing for INR 430bn worth of P75I submarine programme. The stakes are high for both Mazagon Dockyard Shipbuilders (MDSL) partnering with Germany’s TKMS and L&T partnering with Spain's Navantia as L1 bidder is likely to get all the six submarines,” ICICI Securities said in a report released on September 5.
As per the report, MDSL is planning to acquire a new floating dry dock, which may play a pivotal role in constructing eight next generation destroyers for the Indian Navy. Valued at over $10 billion, next-gen destroyers will be built in two phases. The final configuration is slated for determination next year, with construction commencing in CY26 and induction scheduled for CY31.
Adding to this, MDSL has joined forces with Warship Design Bureau to embark on P76. This collaborative effort aims to design 12 indigenous next generation conventional submarines for the Indian Navy. The goal is to finalise a comprehensive and robust design by CY28, laying the groundwork for construction and production activities to commence by CY32.
Besides, MDSL has embarked on an active collaboration with the French firm Naval Group to finalise the selection of new equipment for the three additional Kalvari-class submarines. These submarines are anticipated to incorporate significant enhancements in terms of equipment and technology compared to the initial six Scorpene submarines. Besides, the indigenisation levels are expected to be far higher, the report noted.
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