Rs 38,389 crore order book & Rs 35,000 crore order likely from Ministry of Defence: Debt-free multibagger shipbuilding stock gains over 3 per cent; details inside!

Rs 38,389 crore order book & Rs 35,000 crore order likely from Ministry of Defence: Debt-free multibagger shipbuilding stock gains over 3 per cent; details inside!

The stock gave multibagger returns of 245 per cent in just 1 year and a whopping 1,500 per cent in 3 years.

Today, shares of Mazagon Dock Shipbuilders Limited (MDL) gained 3.66 per cent and to an intraday high of Rs 4,109.30 per share from its previous closing of Rs 3,964.30. Ther stock’s 52-week high is Rs 4,249.95 while its 52-week low is Rs 1,177.

Mazagon Dock Shipbuilders Limited (MDL), Mumbai, established in 1774, is a prominent shipyard in India. Initially a small dry dock, MDL has evolved into a renowned shipbuilding company. It has constructed 801 vessels since 1960, including warships, submarines, cargo/passenger ships, and offshore platforms.

The recent rise in Mazagon Dock's stock price is linked to today’s press release updated on the exchanges (BSE & NSE) that the company is likely to receive a Rs 35,000 crore order from the Ministry of Defence (MoD). However, the company clarifies that submitting a bid for three additional submarines under Project P-75 is a standard business practice. Mazagon Dock submitted a bid for the potential Rs 35,000 crore submarine project, but winning the contract isn't assured, so it doesn't require immediate market disclosure.

The company also mentioned in the press release that Mazagon Dock highlights its role as a government company building vessels for the Indian Navy and MoD. Due to the sensitive nature of their operations, they might not always comply with all continuous disclosure requirements outlined by market regulations.

1) An investor on the Investor Update Call on May 30, 2024, inquired about the progress of P-75 submarine cost negotiations. Management indicated that discussions are ongoing but not finalized and are expected to be completed soon.

2) During an investor call on February 14, 2024, investors inquired about the timeline for awarding a contract for 3 additional submarines. Management acknowledged that their bid was submitted two months prior and the Navy's evaluation process, including cost benchmarking and contract negotiations, is underway. While hoping for a swift award, they realistically expect the government procedures to take 4-8 months to complete.

3) On November 9, 2023, investor call, management discussed a proposal for three additional Scorpene submarines. They assured investors the proposal would be submitted to the Navy within a month, allowing for negotiation and finalization of an order.

4) In an investor call on August 11, 2023, inquiries were made about the status of the three Scorpene submarines discussed during Prime Minister Modi's visit to France. Management clarified that due to the submarines' complexity and upgraded features, negotiations with the Navy and collaborator Naval Group are required. While an order for Mazagon Dock is expected, a definitive timeline is challenging, with an estimate of 4-6 months for finalization.

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Earlier, Indian shipbuilding giant, Mazagon Dock Limited, celebrated its 250th anniversary, marking a transformation from a 1774 dry dock. Now government-owned, they commemorated with new land acquisition, an Indigenous mini-sub launch, eco-friendly boat commissions, and a commemorative coin. The Defence Secretary praised MDL's 250 years of shipbuilding excellence for both the Indian Navy and commercial ventures

According to its Quarterly Results, the net sales increased by 51 per cent to Rs 3,452.37 crore and net profit increased by 103 per cent to Rs 662.97 crore in Q4FY24 compared to Q4FY23. In its annual results, the net sales increased by 24 per cent to Rs 10,568.05 crore and net profit increased by 73 per cent to Rs 1,936.97 crore in FY24 compared to FY23. As of March 31, 2024, the company is debt-free.

As of December 31, 2023, the company’s order book stands at Rs 38,389 crore and as of March 2024, DIIs have increased their stakes to 0.66 per cent from 0.43 per cent in December 2023. The company has a market cap of over Rs 80,000 crore. The stock gave multibagger returns of 245 per cent in just 1 year and a whopping 1,500 per cent in 3 years.

Disclaimer: The article is for informational purposes only and not investment advice.

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