Stock of this ship building company has zoomed 50% thus far in June

Shares of Mazagon Dock Shipbuilders hit a new high of Rs 1,213.40, surging 15% on the BSE in Friday's intra-day trade. Over 8 per cent of total equity of the company changed hands on the NSE and BSE

Shares of Mazagon Dock Shipbuilders hit a new high of Rs 1,213.40 as they rallied 15 per cent on the BSE in Friday’s intra-day trade amid heavy volumes.

Average trading volumes on the counter jumped 1.5 times today with a combined 17 million shares, representing 8.4 per cent of total equity of Mazagon Dock Shipbuilders, changing hands on the NSE and BSE till 02:50 pm. In comparison, the S&P BSE Sensex was up 0.81 per cent at 63,429.

Thus far in the month of June, the stock of the state-owned ship building & allied services company has zoomed 50 per cent on healthy business outlook, as against 1.4 per cent gain in the benchmark index.

Mazagon Dock Shipbuilders is principally engaged in building and repairing of ships, submarines, various types of vessels and related engineering products for its customers.

Last week, during the visit of Minister of Defence of the Republic of Germany, German shipbuilder ThyssenKrupp Marine Systems (TKMS) and Mazagon Dock Shipbuilders signed a non-binding / non-financial Memorandum of Understanding (MoU) for cooperation and preparation for Submarine Project P75-I.

According to the MoU, Thyssenkrupp Marine Systems would contribute to the engineering and design of the submarines as well as the consultancy support to this joint project, and Mazagon Dock Shipbuilders Limited would take responsibility for constructing and delivering the respective submarines.

As the strategic foreign partners have been finalised by Mazagon Dock Shipbuilders and L&T, the process of Project 75-I is now expected to pick up fast after a delay of many years as the Indian Navy and government will place an order for six submarines post evaluation of bids. However, as per the Mazagon Dock Shipbuilders management, it will take 12-18 months for order placement.

"Moreover, the project cost of Rs 45,000 crore is also expected to be revised upwards. We believe there is also a possibility of increase in number of submarines under this project from six to nine as Indian Navy and the government has been planning to order three additional conventional submarines with AIP," ICICI Securities had said in a note.

Meanwhile, in the past one year, the stock price of the company has skyrocketed by nearly 380 per cent as it reported strong earnings for the financial year 2022-23 (FY23) and healthy order book position. In comparison, the S&P BSE Sensex has rallied 23 per cent during the period.

For FY23, Mazagaon Dock Shipbuilders had posted 83 per cent year-on-year (YoY) jump in its consolidated profit after tax (PAT) at Rs 1,119 crore on healthy operational performance. Revenue from operations grew 36.5 per cent YoY at Rs 7,827 crore.

As on March 31, 2023, total order book position of the company stood at Rs 38,755 crore, which provides execution stability and consistent cash availability.

The current orderbook is likely to get exhausted by FY27 with peak revenue generation in FY25. In FY24, the company is expecting an order worth Rs 3,200 crore for patrol vessels for Indian Coast Guard and an export order worth Rs 1,000 crore.