Mazagon Dock Shipbuilders Eyes 15% Ebitda Margins, 10% Revenue Growth In FY26
Mazagon Dock Shipbuilders’ net profit declined 51% to Rs 325 crore in the March quarter, triggering investors’ concerns over the near-term outlook.
State-owned Mazagon Dock Shipbuilders Ltd. expects a strong growth in Ebitda margins and revenue in the current financial year, backed by a strong order book.
The defence public sector undertaking expected Ebitda margins at 15% in fiscal 2026. The company has guided for revenue growth of 8-10%. The defence PSU firm's order book currently stands at over Rs 32,000 crore.
Margins may vary depending on individual contracts and the company is in talks with other countries for new opportunities, according to its Director (Finance) Ruchir Agrawal.
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Speaking to NDTV Profit on Monday, Agrawal explained that the sharp margin drop to 2.8% in Q4FY25 from 16.9% a year ago was due to a one-time provisioning of Rs 532 crore for projected losses on two contracts. The company’s consolidated net profit fell 51% to Rs 325 crore in the recently concluded quarter, down from Rs 663 crore a year ago, worrying investors.
“The margin dip was due to a Rs 532-crore provision of losses on two contracts. The standard norm requires us to book the full anticipated loss upfront, not just at completion. This is based on our best estimates. We will review it quarterly….Despite this, our Ebitda margins have improved….and we remain on a strong growth trajectory,” he said.
In Q4FY25, the consolidated Ebitda dropped 54% to Rs 400 crore from Rs 873 crore a year ago.
Agrawal emphasised that this is a one-time estimation based on their best assessment, and they do not expect significant additional provisions in future quarters. With major orders already placed, the company anticipates stability moving forward. When asked about the possibility of writing back some of the Q4 provisions, he said that it cannot be ruled out, but the likelihood is limited.
On revenue outlook for FY26, he explained, “The 8% to 10% growth guidance depends largely on how quickly the Navy finalises new orders. While advances may come in, converting them to revenue takes time due to long design and approval cycles… often up to a year. So, revenue visibility for FY26 is linked to the pace of order finalisation and pricing negotiations.”
When asked if Operation Sindoor is expected to trigger order inflows, he explained that while the Indian Navy was not directly involved in the recent military escalation against Pakistan, their presence added credibility.
Agrawal also noted that the company is in discussions with countries like Malaysia and Indonesia for potential orders.
Mazagon Dock Shipbuilders shares closed 2.84% lower at Rs 3,379.4 apiece on the NSE on Monday, compared to a 0.14% drop in the benchmark Nifty50 at 24,716.6.
