Mazagon Dock To See 'Peak Year' In FY25, Says CMD Sanjeev Singhal

Mazagon Dock Shipbuilders Ltd. expects FY25 to be significant as delivery of several orders will take place then.

"With respect to current orders, it would be a peak year," Chairman and Managing Director Sanjeev Singhal told BQ Prime's Sajeet Manghat.

Mazagon Dock currently has unexecuted orders totalling about Rs 39,000 crore. These are divided into three major orders including for P75 submarines, P15B missile destroyers and P17A stealth frigates.

"Currently, at the Mumbai shipyard, we have the capacity to build 11 submarines and 10 warships simultaneously; it is a total of 21 vessels. Corresponding to 21 vessels, currently in hand, we have six ships and two submarines. We have sufficient capacity to cater to any new requirement," Singhal said.

Mazagon Dock Q1 FY24 Highlights (Consolidated, YoY)

• Revenue down 2.58% at Rs 2,172.7 crore versus Rs 2,230.3 crore.

• Ebitda declines 1.14% to Rs 171.7 crore versus Rs 173.7 crore.

• Ebitda margin at 7.9% versus 7.78%.

• Net profit up 39.84% at Rs 314.3 crore versus Rs 224.8 crore.

Its first quarter earnings saw consistent performance and the management is satisfied with the company's operations, he said. "The PAT (profit after tax) is comparatively better, primarily on account of the increase in other income on CPLY (current period, last year) basis. Going forward, we believe that similar kind of other income accruals would be there."

The rise in other income is due to uptrend in the interest received by the company from its fixed deposits, according to him.

Mazagon Dock has put in liquidated damage refund requests, with the cases currently under investigation, Singhal said. He expects the LD refunds to potentially boost the company's revenue as well as profitability.

The company has been growing at a rate of 30-35%. The management's projected growth rate stands at 10%, which is above the industry average of 5-7%, Singhal said.

The rate of 30-35% growth was "exceptional" on account of "certain high value equipment going onboard", he said. Maintaining a similar momentum on a consistent basis is not feasible for the company, according to him.

In terms of volatility in revenue, he said it cannot be avoided and at a "certain level there is smoothening of this lumpiness, as various projects would be at different stages at any particular point of time".

For the last four quarters, the company has been delivering consistently, he said. In fiscal 2024, he doesn't expect a lot of variation. "Certain growth would definitely be there, but a very significant variation quarter-on-quarter may not be there."

Shares of Mazagon surged 9.51% to Rs 1,906.95 apiece as of 11:54 a.m. on Monday, compared to a 0.38% decline in the benchmark NSE Nifty 50. The shares rose as high as 10.16% intra-day.

The total traded volume so far in the day stood at 1.8 times its 30-day average. The relative strength index is at 64.80, implying that the stock is neither overbought, nor oversold.

Of the four analysts tracking the company, two maintain a ‘buy’, one recommends a ‘hold’, and one suggests a ‘sell’ on the stock, according to Bloomberg data. The average 12-month consensus price target implies a downside of 19%.