Maintaining their upward trajectory, shares of Mazagon Dock Shipbuilders, one of the country's leading defence PSUs, climbed 19% in early trade on Friday to mark a new all-time high of ₹2,484.70 apiece. This strong bull run in shares came after the company signed a Master Ship Repair Agreement (MSRA) with the US government, represented by NAVSUP Fleet Logistics Centre (FLC) Yokosuka.
"This is a non-financial agreement. There are only two shipyards in the country, including MDL, who have signed the MSRA. The agreement is expected to open up voyage repairs of US Navy ships at MDL," the company said in an exchange filing on Thursday.
The shares have been on a winning streak over the last one-year period, generating a return of 440%. During this period, the shares scaled up from ₹432 to the current level of ₹2,332 apiece, and from their 52-week low of ₹403, they are up by 480%. This extraordinary performance positioned the stock as the top performer in the S&P BSE PSU index.
On June 30, the Ministry of Defence signed a ₹2,725 crore contract with the company for medium refit with life certification (MRLC) of the sub-surface killer class of submarine INS Shankush.
Mazagon Dock Shipbuilders is one of India's leading defence public-sector undertaking shipyards under the Ministry of Defence (MoD). It is principally engaged in building and repairing ships, submarines, various types of vessels, and related engineering products for its customers. Since its inception in 1934, the company has delivered 801 vessels and built 27 warships and 7 submarines.
The shares made their debut on the stock exchanges on October 12, 2020 at ₹173 apiece over the issue price of ₹145. Since its listing, the stock has consistently delivered impressive returns.
In its first year of listing, the stock gained 24%, followed by a 28% increase in CY21. The subsequent year witnessed an extraordinary multi-bagger return of 189%. As of the current year, the stock has already surged by an outstanding 196%.
The lock-in period for the company's pre-listing shareholders is set to expire on October 9, 2023. After this, approximately 40 million shares will become eligible for trading.
The Indian government has set aside ₹40 billion to implement the scheme over 10 years under the Shipbuilding Policy 2015, which aims to provide financial assistance to shipbuilders and grant infrastructure status to the industry.
The Financial Assistance Policy of 2015, coupled with exemption from Customs and Central Excise Duties on all raw materials and parts for use in the manufacture of Ships/Vessels/Tugs, Pusher Crafts, shall reduce the cost of manufacturing ships in India, thus improving the competitiveness of Indian shipbuilders.
The country's strategic position along the east-bound and west-bound international trade routes offers an opportunity to undertake repairs to the vessels plying on these routes. A main container route connecting America and Europe to the east passes very close to the Indian coastline, presenting a major opportunity for repairs, the company said in its FY23 annual report.
In Q1FY24, the company's revenue from operations came in at ₹2,173 crore as compared to ₹2,230 crore in the year-ago quarter. The profit after tax stood at ₹287 crore in Q1FY24, up from ₹217 crore in Q1FY23.
For the fiscal year 2022-2023, the company recorded the highest-ever revenue from operations of ₹7,827 crore and the highest operating profit of ₹716 crore. The profit after tax for the year was recorded at ₹1,073 crore, an 83% increase over the previous financial year.
03 analysts polled by MintGenie on average have a 'hold' call on the stock.
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