Mazagon Dock Shipbuilders shares rise 6% on Rs 1070-crore contract with defence ministry; check details

Shares of Mazagon Dock Shipbuilders Ltd rose over 4% today after the defence ministry inked a contract worth Rs 1,070.47 crore with Mazagon Dock Shipbuilders Ltd (MDL), Mumbai. The agreement relates to the acquisition of 14 fast patrol vessels (FPVs) destined for service with the Indian Coast Guard (ICG).

The multibagger stock rose 6.43% intraday to Rs 2475 against the previous close of Rs 2325.35 on BSE. Total 0.63 lakh shares of the firm changed hands amounting to a turnover of Rs 15.34 crore. Market cap of Mazagon Dock rose to Rs 48,858 crore on BSE. In a year, the stock rose 228.51% against 27.38% returns by the benchmark BSE 500 index.

Mazagon Dock shares have a one-year beta of 0.2, indicating very low volatility during the period. In terms of technicals, the relative strength index (RSI) of Mazagon Dock stands at 56.4, signaling it's trading neither in the overbought nor in the oversold zone. Mazagon Dock shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

“Mazagon Dock Shipbuilders Limited (MDL) has signed a contract with the Acquisition wing of Ministry of Defence for Construction and Delivery of Fourteen (14) Fast Patrol ‘Vessels (FPVs) for Indian Coast Guard (ICG) on 24 January, 2024,” said the defence firm in a communication to bourses.

The contract is for designing, building and delivering the vessels after completion.

“Ist vessel delivery is TO + 24 months and delivery of subsequent vessels at intervals of three (03) months, where TO is the date of release of advance payment by the Buyer to the Seller,” said Mazagon Dock.

HDFC Securities has assigned a target price of Rs 2,525 to the Mazagon Dock stock. It has recommended to buy the stock in the Rs 2100-2142 band & add more on dips to Rs 1900-1934 band. Base case fair value of the stock is Rs 2338 (25x Sept’25E EPS) and the bull case fair value of the stock is Rs 2525 (27x Sept’25E EPS) over the next two to three quarters.

Vaibhav Kaushik, Research Analyst, GCL Broking said , "Mazagon Dock stock is under consolidation from the last 4 to 5 months. Now stock is ready for big moves. One can buy near Rs 2270 with a stop loss of Rs 2190 for a target of Rs 2500 to 2600."

The company will announce its Q3 earnings on February 12, 2024. The defence firm reported a 56% rise in consolidated net profit at Rs 333 crore in Q2 against Rs 214 crore in the corresponding quarter of the previous year. The board also approved an interim dividend of Rs 15.34 per share for the financial year 2023-24.

Revenue from operations in Q2 rose 7% year-on-year to Rs 1,828 crore against Rs 1702 crore a year ago. EBITDA or operating profit climbed 50% year-on-year to Rs 177 crore in the quarter. Net profit rose 6% from Rs 314 crore in the June quarter. Revenue from operations declined 16% quarter-on-quarter. Profit before tax (PBT) in the September quarter rose 53% year-on-year to Rs 407 crore against Rs 261 crore in the corresponding quarter of last year.

About the company

Mazagon Dock Shipbuilders Ltd (MDS) is a shipbuilding and offshore fabrication yard. The company's major activities include shipbuilding, ship repairs and fabrication of offshore structures. It provides warships, merchant ships, submarines, support vessels, offshore platforms, passenger cum cargo vessels, trawlers, main and helidecks and barges.

Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as an investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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