Mazagon Dock Shipbuilders buys stake in Sri Lanka's Colombo Dockyard; stock reacts

Defence PSU Mazagon Dock Shipbuilders Ltd (MDL) on Friday announced that its board has approved the acquisition of a controlling and substantial stake in Colombo Dockyard PLC (CDPLC), a listed entity on the Colombo Stock Exchange, Sri Lanka.

Following the development, the stock gained 2.44 per cent to hit a high of Rs 3197.70 on BSE. The stock eventually settled at Rs 3,169.50, up 1.54 per cent. With this, the stock has gained 42 per cent in 2025 so far against 7.02 per cent during the same period. 

The investment, capped at $52.96 million (approximately Rs 452 crore), will be made through a mix of primary subscription and secondary share purchase from existing shareholders, including Onomichi Dockyard, the majority shareholder, which has exited its stake.

Mazagon Dock stated that the acquisition is subject to customary closing conditions, including statutory and regulatory approvals. Upon completion, CDPLC will become a subsidiary of Mazagon Dock Shipbuilders.

“For this purpose, the Company, CDPLC, and Onomichi have executed definitive documents outlining the terms and conditions of the proposed acquisition,” the company said.

Defence stocks have been in news of late, as the government’s focus on localisation, increased capex, and the ‘Make-in-India’ initiative is seen driving growth for industrial PSUs. 

Mazagon Dock Shipbuilders is the only Indian shipyard to have built destroyers, and conventional submarines for the Indian Navy. It is the only shipyard to be conferred the Navratna status.

Having delivered six Kalvari-class submarine, the company is expecting awarding of the three additional Kalvari-class submarines. 

With indigenization initiatives, additional focus on the Navy’s capital expenditure and government impetus, the medium-term outlook for all Indian shipyards continue to remain positive, Antique Stock Broking said  earlier this month. 

"We maintain BUY rating on the stock with a SoTP-based target price of Rs 3,858 valued at 50x FY27E core earnings," Antique Stock Broking.