Mazagon Dock Shipbuilders Limited Eyes Strong Growth with Robust Order Book and Strategic Capex Plans

Mazagon Dock Shipbuilders Limited (MDL) announced robust performance for the second quarter of Fiscal Year 2026, reporting a 6.3% year-over-year revenue increase to Rs 2,929 crore. The company also saw a significant improvement in profitability, with EBITDA margins expanding by 519 basis points to 23.7%, leading to a 36% surge in EBITDA compared to the previous year.

The company's order book stands at Rs 27,415 crore as of Q2 FY26, providing strong revenue visibility. MDL anticipates significant new orders, including potential contracts for Landing Platform Docks (LPDs) worth Rs 35,000-40,000 crore, 17 Bravo ships valued at Rs 50,000-60,000 crore, and a destroyer class project estimated at Rs 70,000-80,000 crore, primarily from the Indian Navy. Furthermore, the P75I submarine project and the 17 Bravo frigate Request for Proposal (RFP) are expected soon. Additional orders totaling Rs 1,000 crore are anticipated from entities like Shipping Corporation of India, ONGC, and IOCL.

To reduce its dependence on the Indian Navy (which constitutes 80-90% of its current order book), MDL has secured Rs 7,000 crore in offshore orders from ONGC and aims for a balanced mix of defence, commercial, and offshore projects. The company targets an order book of Rs 1 lakh crore by FY27.

Strategic capital expenditure plans are underway. MDL plans to invest Rs 1,000 crore each for de-bottlenecking its Nava and South yard annexes and for P-75I submarine infrastructure. A major Rs 5,000-crore capex is allocated over five years to establish a new greenfield commercial shipyard in Thoothukudi, Tamil Nadu, aimed at enhancing execution speed and capacity for new orders. The company also has the capacity to construct 11 submarines simultaneously and is exploring international business opportunities.

Looking ahead, MDL projects revenues of Rs 12,500 crore for FY26 and 5% growth in FY27, with expectations of stable margins above 15%. The company also aims to boost annual ship repair revenue at its newly acquired Colombo Dockyard by 50% from Rs 1,000 crore to Rs 1500 crore within two years.

The stock is currently trading at Rs 2768, representing 39 times its fiscal 2027 estimated earnings. This valuation is considered reasonable given the company's strong growth potential, solid balance sheet, and dominant position in the industry.

Impact: This news provides strong positive indicators for Mazagon Dock Shipbuilders Limited, suggesting potential for significant revenue growth and profitability due to a large order backlog and strategic capacity expansion. This can lead to increased investor confidence and potentially higher stock valuations. Rating: 8/10

Definitions: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. Basis Points (bps): A unit equal to one-hundredth of one percent (0.01%). For example, 519 bps equals 5.19%. Order Book: The total value of contracts that a company has secured but not yet fulfilled. It indicates future revenue. Revenue Visibility: The predictability and certainty of future revenue based on current contracts and expected business. Capex (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, and equipment. De-bottlenecking: The process of identifying and removing constraints in a production or operational process to increase efficiency and output. Greenfield Shipyard: A new shipyard built on an undeveloped site, implying a completely new facility. Landing Platform Dock (LPD): A type of amphibious assault ship used by navies to deploy troops and vehicles ashore. 17 Bravo ships: A class of frigates being built for the Indian Navy. Destroyer Class Project: A project to build modern destroyers, which are large warships designed to escort and defend other ships. P75I Submarine Project: A significant Indian Navy program to build advanced submarines. Frigate RFP: Request for Proposal for frigates, a formal document soliciting bids from potential suppliers for building ships. Ship Repair Revenue: Income generated from servicing and repairing ships. Colombo Dockyard: A shipbuilding and repair facility located in Colombo, Sri Lanka, acquired by MDL.