Mazagon Dock Shipbuilders: Defence stock MDL a 'Buy' post Q2 results? Here's target price
Nirmal Bang has revised down its FY27 estimates, factoring in the near completion of major naval programmes such as the P15B destroyers and P17A frigates.
- Oct 30, 2025,
- Updated Oct 30, 2025 8:49 AM IST
Defence stock: Nirmal Bang Institutional Equities has retained its ‘Buy’ rating on Mazagon Dock Shipbuilders (MDL) following the defence company’s September quarter results, valuing the stock at 45 times September 2027 earnings to arrive at a target price of Rs 3,515. MDL reported a 6.3 per cent year-on-year rise in revenue, with Ebitda up 36 per cent and PAT increasing 28 per cent. While revenue came in slightly below Nirmal Bang Institutional Equities’ estimate, both Ebitda and PAT exceeded its projections. The earnings beat was driven by the reversal of liquidated damages recognised in previous quarters, which lifted Ebitda margins to 23.7 per cent compared with 18.5 per cent in Q2FY25, the brokerage said.
Nirmal Bang has revised down its FY27 estimates, factoring in the near completion of major naval programmes such as the P15B destroyers and P17A frigates. With all P15B destroyers delivered and the third P17A frigate expected by end-2025, Mazagon Dock’s order book will increasingly comprise lower-margin projects for the Indian Coast Guard, multipurpose hybrid vessels and ONGC, it said.
This transition from high-value, long-cycle naval contracts to shorter-cycle, lower-margin commercial and coast guard projects has led to a downward revision in FY27 revenue and profit expectations, Nirmal Bang said.
Revenue in FY26 is expected to reach around Rs 12,500 crore, with a projected 5 per cent year-on-year increase in FY27. Nirmal Bang, however, anticipates stronger growth of 17 per cent in FY26E and 10 per cent in FY27E, supported by improved execution and incremental order inflows. The management has maintained a conservative Ebitda margin guidance of over 15 per cent, with potential improvement once major submarine programmes such as P75-AS and P75(I) commence.
"The company expects to close FY27 with an order book exceeding Rs1trn, driven by substantial submarine orders. The Request for Proposal (RFP) for the Mine Counter Measure Vessel (MCMV) programme is expected within 3–4 months, followed by the Project 17B frigate RFP, together valued at approximately Rs 90,000–1,00,000 crore. A planned capex of Rs50bn has been earmarked for the Nava Yard, South Yard Annex and a greenfield commercial shipyard, supported by government incentives," Nirmal Bang said.
Nirmal Bang projects revenue, Ebitda and PAT CAGR of 13 per cent, 12 per cent and 11 per cent, respectively, over FY25–FY27. The stock currently trades at a one-year forward P/E of 37.5 times, above its three-year average. However, the brokerage believes continued execution visibility, strong order inflows and a robust pipeline justify the premium valuation.
Defence stock: Nirmal Bang Institutional Equities has retained its ‘Buy’ rating on Mazagon Dock Shipbuilders (MDL) following the defence company’s September quarter results, valuing the stock at 45 times September 2027 earnings to arrive at a target price of Rs 3,515. MDL reported a 6.3 per cent year-on-year rise in revenue, with Ebitda up 36 per cent and PAT increasing 28 per cent. While revenue came in slightly below Nirmal Bang Institutional Equities’ estimate, both Ebitda and PAT exceeded its projections. The earnings beat was driven by the reversal of liquidated damages recognised in previous quarters, which lifted Ebitda margins to 23.7 per cent compared with 18.5 per cent in Q2FY25, the brokerage said.
Nirmal Bang has revised down its FY27 estimates, factoring in the near completion of major naval programmes such as the P15B destroyers and P17A frigates. With all P15B destroyers delivered and the third P17A frigate expected by end-2025, Mazagon Dock’s order book will increasingly comprise lower-margin projects for the Indian Coast Guard, multipurpose hybrid vessels and ONGC, it said.
This transition from high-value, long-cycle naval contracts to shorter-cycle, lower-margin commercial and coast guard projects has led to a downward revision in FY27 revenue and profit expectations, Nirmal Bang said.
Revenue in FY26 is expected to reach around Rs 12,500 crore, with a projected 5 per cent year-on-year increase in FY27. Nirmal Bang, however, anticipates stronger growth of 17 per cent in FY26E and 10 per cent in FY27E, supported by improved execution and incremental order inflows. The management has maintained a conservative Ebitda margin guidance of over 15 per cent, with potential improvement once major submarine programmes such as P75-AS and P75(I) commence.
"The company expects to close FY27 with an order book exceeding Rs1trn, driven by substantial submarine orders. The Request for Proposal (RFP) for the Mine Counter Measure Vessel (MCMV) programme is expected within 3–4 months, followed by the Project 17B frigate RFP, together valued at approximately Rs 90,000–1,00,000 crore. A planned capex of Rs50bn has been earmarked for the Nava Yard, South Yard Annex and a greenfield commercial shipyard, supported by government incentives," Nirmal Bang said.
Nirmal Bang projects revenue, Ebitda and PAT CAGR of 13 per cent, 12 per cent and 11 per cent, respectively, over FY25–FY27. The stock currently trades at a one-year forward P/E of 37.5 times, above its three-year average. However, the brokerage believes continued execution visibility, strong order inflows and a robust pipeline justify the premium valuation.