Why Mazagon Dock Shipbuilders Share Price is Rising

Shipbuilding companies play a pivotal role in the global maritime industry, constructing vessels that facilitate international trade, transportation, and naval defence.

These companies are at the forefront of engineering and technological innovation, designing and building a wide range of ships including cargo carriers, tankers, container ships, passenger ships, and specialised vessels such as icebreakers and offshore platforms.

In India, shipbuilding companies have come a long way in terms of technology innovation. Currently, they supply about 20% of the market demand for commercial vessels worldwide.

In the last few days, stocks of shipbuilding companies have caught the attention of investors.

Shares of Cochin Shipyard, Garden Reach Shipbuilders and Mazagon Dock have seen a jump.

Shares of Mazagon Dock, in particular, have seen a jump of over 10% in one day.

So, what's causing a rise in the stock price?

Let's find out.

Q4 Result Boosts Stock

Shares of Mazagon Dock jumped more than 10% yesterday after the company reported robust results for the March 2024 quarter and the financial year 2024.

The company reported a consolidated net profit of Rs 6.6 bn for the quarter, which was double the net profit of Rs 3.3 bn in the year ago quarter. The net profit margin stood at 21.36% up from 15.69%.

This was on the back of an increase in revenue.

The company reported a consolidated revenue of Rs 31 bn, up from Rs 21 bn in the year-ago period, a year-on-year growth of 49.3%.

The company's net worth also moved north to Rs 62.4 bn in the reported quarter as against Rs 47.6 bn.

For the full year, the company's net profit rose 73.1% to Rs 19.4 bn as against Rs 11.2 bn. Sales rose 20.9% to Rs 95 bn as against Rs 78.3 bn during the previous year.

The board of directors also declared a final dividend of Rs 12.1 per share for the year.

Mazagon Dock Shipbuilders is diversifying its activities by increasing its presence in underwater marine, heavy engineering equipment, and offshore platforms.

Moreover, it is planning to develop a greenfield shipyard at Navi Mumbai with a ship lift, wet basin, workshops, and ship repair facilities.

Strong Financials vs Competitors

Mazagon Dock Shipbuilders has stronger financials that continue to support its growth. It also has better numbers as compared to its peers like Cochin Shipyard.

MDL's revenue has grown at a compounded growth rate of 17% in the last three years, while net profit has grown at a compounded growth rate of 37%. Cochin Shipyard, on the other hand, has seen degrowth in both revenue and net profit.

With respect to margins, while both companies have relatively low operating profit margins, MDL's operating and net profit margins have tripled and doubled respectively in the past eight years.

This is reflected in the company's return ratios as well. MDL's return on equity (RoE) has increased from 14% in 2021 to 24.3% in 2023 and return on capital employed (RoCE) from 18.9% to 32.8%.

Cochin Shipyard, however, has seen its ratios dwindle.

How Mazagon Dock Shipbuilders Share Price has Performed Recently

In the past five days, shares of the company have risen by 4.7%.

The stock is also up 40% in the past month and around 63% in the past six months.

The stock touched its 52-week high of Rs 3,478 on 30 May 2024 and a 52-week low of Rs 797.2 on 1 June 2023.

At the current price, the company trades at a price to earnings multiple of 44.1x.

About Mazagon Dock Shipbuilders

Mazagon Dock is engaged in manufacturing warships, submarines, cargo, and passenger ships for the defence sector. It also undertakes ship repairing activities for its clients.

It primarily manufactures for the defence sector and has built 802 vessels including 28 warships ranging from advanced destroyers to missile boats and 7 submarines.

The company is looking forward to diversifying its activities and increase presence in the field of underwater equipment and platform, marine equipment and platform, heavy engineering equipment, offshore platform etc.

It has also penetrated into a new segment i.e. manufacturing of cargo containers and has successfully bagged orders of 2,500 containers from Container Corporation of India Limited.

To know more, check out Mazagon Dock Ship's financial factsheet and latest quarterly results.

You can also compare Mazagon Dock Shipbuilders with its peers on our website:

Mazagon Dock Shipbuilders vs Cochin Shipyard

Mazagon Dock Shipbuilders vs Garden Reach Shipbuilders

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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