Mazagon Dock shares jump 5% on winning ₹1,145 cr order from ONGC

Shares of state-owned Mazagon Dock Shipbuilders rallied over 5% on Monday, snapping two sessions losing streak, after the company secured an order worth ₹1,145 crore from natural gas major ONGC. The contract covers part replacement of pipeline project (PRPP), which includes laying down of around 44.4 km of subsea pipelines divided into 19 segments, the warships and submarines manufacturer says in an exchange filing.

Cheering the news, shares of Mazagon Dock Shipbuilders jumped 5.4% to hit an intraday high of ₹2,166.90 on the BSE. Early today, the stock opened higher at ₹2,140, up 4% against the previous closing price of ₹2,056.10.  

With a market capitalisation of ₹42,804 crore, Mazagon Dock shares are currently down 12.7% from its 52-week high of ₹2,483 touched on September 8, 2023.The largecap PSU stock, however, has zoomed over 250% from its 52-week low of ₹612.8 hit on March 27, 2023.   

Mazagon Dock Shipbuilders shares have turned multibagger 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. The counter gained 140% in the last one year, while it has jumped 170% in the calendar year 2023. The stock has more than doubled in six months, whereas it added 7% in a month.

In en exchange filing on December 8, Mazagon Dock said, “Oil and Natural Gas Corporation Limited (ONGC) has placed a notification of award of contract on December 07, 2023 on Mazagon Dock Shipbuilders for part replacement of pipeline project (PRPP) on turnkey basis at a total lump sum price of ₹1,145.06 crore, including all taxes and duties.”

The timeline for the completion of the project is May 15, 2024, as per the regulatory filing.

Earlier this month, Mazagon Dock released its September quarter earnings report which showed that its consolidated net profit jumped 56% to ₹333 crore as compared to ₹214 crore in the corresponding quarter of the previous year. Revenue from operations increased 7% year-on-year to ₹1,828 crore as against ₹1702 crore in the year ago period. The operating profit or EBITDA rose 50% year-on-year to ₹177 crore in Q2 FY24, while margins improved to 9.7%.

The board of the company also declared an interim dividend of ₹15.34 per share with a face value of ₹10, aggregating to ₹309 crore, which will be given out of the profits of the company in FY24. This is the highest-ever dividend paid by Mazagon Dock after it declared ₹9.1 apiece in November 2022.

In the past 12 months, Mazagon Dock has declared an equity dividend amounting to ₹22.20 per share, while it has declared 7 dividends since February 2021. At the current share price, the dividend yield stands at 1.05%.

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