Mazagon Dock bags $42 mn contract; shares surge 4.3%

Shares of state-owned shipbuilding & allied services major Mazagon Dock Shipbuilders Ltd surged 4.3% today after the company signed a $42 million (around ₹348 crore) contract with a European client for the construction of three units of 7,500 DWT multi-purpose hybrid powered vessels.

Mazagon will design, build and deliver the vessels after completion, with the first vessel delivery expected in 27 months after contract effectiveness and the delivery of subsequent vessels at the interval of two months.

Amid the development, the company shares surged in the early morning trade to an intra-day high of ₹2,176.85, taking its market cap to ₹43,181.83 crore. At the current share price of ₹2,141, the shares are trading 14% down as compared to the one-year high of ₹2,483 touched on September 8, 2023. The scrip has risen manifold from its 52-week low of ₹612.8 hit on March 27, 2023.

The Mazagon Dock Shipbuilders' shares have turned multi-bagger in the last 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.

The company shares have seen a 153.98% rise in the past year, while the scrip surged 171.20% in the year-to-date time. In the six months, and one month, the share has seen a 75.40% and 7.95% rise, respectively.

The company on December 11, 2023, had secured an order worth ₹1,145 crore from natural gas major ONGC. It covered part replacement of pipeline project (PRPP), which includes the laying down of around 44.4 km of subsea pipelines divided into 19 segments.

Mazagon's Q2 FY24 profit surged 55.62% YoY to ₹312.94 crore, while its operating income surged 57.52% YoY. The company's revenue for the quarter ending September 30, 2023, was ₹1,827.70 crore, a decline of 15.88% YoY. The earnings per share for the quarter stood at ₹16.5, up 55.51% YoY.

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 a cost of over ₹45,000 crore.

Domestic brokerage ICICI Securities in its report said Mazagon Dock was in a race to win a submarine tender of the Indian Navy. MDSL was planning to acquire a new floating dry dock, which might play a pivotal role in constructing eight next-generation destroyers for the Indian Navy, it said. Valued at over $10 billion, next-gen destroyers would be built in two phases. The final configuration is slated for determination next year, with construction commencing in CY26 and induction scheduled for CY31.

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