Mazagon Dock Q4 Results Review: Short-Term Blip, Long-Term Outlook Positive Says Nirmal Bang Maintaining 'Buy'

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Nirmal Bang Report

Mazagon Dock Shipbuilders Ltd.'s revenue, Ebitda, and PAT Growth CAGR during FY25-FY27E stands at 21%, 35%, and 27%, respectively. Mazagon Dock anticipates a notable enhancement in margins and profitability in the coming years as substantial orders come to fruition. The company is confident that the contracts for the P75 additional submarines and the P75I submarines will be signed in FY26. This is anticipated to raise the order book from the current Rs 320 billion to over Rs 1.25 trillion.

With the arrival of these projects, a notable rise in margins and profitability is anticipated. The economies of scale associated with these large submarine projects, along with the efficiency initiatives driven by Shipyard 4.0 and digital transformation efforts, are anticipated to improve the overall profitability of the yard.

The company is trading at a 1-year forward P/E ratio of 36.2x. The stock has rallied 43% since our preview published on April 11, 2025.

We retain Buy and have increased the multiple by 71% and now value the stock at 45x Mar-27E EPS (+2 SD above mean), which is above its three-year average P/E of 20.1x, with a target price of Rs 4,350 implying an upside of 25.1%.

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