Mazagon Dock Shipbuilders shares: PSU defence stock in focus on Rs 1,486 crore order

Shares of Mazagon Dock Shipbuilders Ltd (MDL) are in focus on Monday morning after the state-run PSU said it won a subsea pipeline replacement contact from Oil and Natural Gas Corporation Ltd (ONGC) on EPC reimbursable basis (OBE) at the ceiling price of Rs 1,486.40 crore including all taxes and duties.

Mazagon Dock Shipbuilders' order book till August 14 stood at Rs 40,400 crore, highest among the three shipyards. A major chunk of it comprises of P17A stealth frigates (Rs 16,630 crore pending from total order value of Rs 26,900 crore), P15B destroyer (Rs 9,850 crore remaining from total order value of Rs 32,090 crore). Eliminating 20 per cent of it for spares and warranties, about Rs 32,000 crore worth of orders are seen to be executed by Mazagon Dock Shipbuilders from FY25-27.

Mazagon Dock Shipbuilders is the only shipyard with prior experience of building submarines and destroyers. Antique Stock Broking last week maintained a 'Buy' recommendation on the stock with a target of Rs 5,483. The scrip closed at Rs 4,400.30 on Friday.

Mazagon Dock Shipbuilders shares have fallen 10 per cent in the past one month but are still up 92 per cent in 2024 so far. The defence PSU has its 91st AGM scheduled on September 26 at 11:00 am, through video conferencing and other audio visual means.

Recently, Mazagon Dock Shipbuilders signed an individual shipbuilding contract with an European client for the construction of additional three 7,500 (DWT) Multi-Purpose Hybrid Powered Vessels (MPHPV), valued at $43 million. With this, the company has secured an export order for construction of a total of six MPHPVs, amounting to $85 million.

"There are only six large shipyards in the country and with indigenisation 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.