Mazagon Dock Rated New 'Sell' At Asian Markets Securities As Brokerage Says Premium Valuations A Concern

Mazagon Dock Shipbuilders Ltd., has received a sell rating from Asian Markets Securities as the brokerage initiated coverage on the stock, with a target price of Rs 2,100.

The is the second bearish rating on the stock, among the analysts tracked by Bloomberg. Prior to this JPMorgan had rated 'underweight' on the stock last month.

The brokerage values Mazagon Dock Shipbuilders at price-to-earnings ratio of 24 times FY28E EPS, as the absence of near-term triggers raises concerns over premium valuations.

The brokerage believes that while the growth story looks strong during fiscal 2029-35 period, the company will face a structural execution gap in fiscal 2027 and fiscal 2028, with limited revenue visibility post fiscal 2026 execution.

The company's upcoming orders of over Rs 1 trillion ensures long term revenue visibility. "With approximately 75% of its current order book executable by FY27 and future mega projects unlikely to start contributing before FY29, MDL faces an interim revenue dip," it added.

Asian Markets Securities expects Mazagon Dock Shipbuilders to post a revenue of 10%, Ebitda of 16% and earnings CAGR of 13% over FY25-28E.

"Out of the existing approximately Rs 320 billion orderbook, approximately 75% will get executed over the next two years. The potential orderbook for FY26 is expected to be over Rs 1,250 billion comprising of P75 Additional Scorpene-class Submarine, P75I and P17 Bravo. However, the delivery timelines of these projects are scheduled over FY29-35 onwards," the brokerage noted.

The brokerage highlighted that while the growth story looks strong during FY29-35 period, the company will face a structural execution gap in FY27 and FY28 with limited revenue visibility post FY26 execution, revenue growth of approximately 3% over FY26 base.

On the company's orderbook, the brokerage highlighted that P75A, a three-ship project worth approximately Rs 400 billion to be built by MDL is expected to be signed within next 1-2 months. The ramp up in execution of this project will only begin in FY29, it added.

The brokerage expects Mazagon Dock Shipbuilders to be the L1 for the ‘P-17 Bravo’— a seven-ship project worth approximately Rs 700 billion. The RFP is expected to come by December 2025. "Revenues from this high margin project are expected to commence from FY29," it added.