Mazagon Dock Shipbuilders bounces back after 3-day losing streak; stock closes 5.2% higher

The Mazagon Dock Shipbuilders stock hit an intraday high of ₹4,633 apiece on the NSE on Wednesday compared to its previous close of ₹4,299.55. However, the defence stock pared some of its early gains to close at ₹4,524 apiece, up 5.22%, on the NSE.

Mazagon Dock shares declined in the past three consecutive sessions, logging a cumulative loss of nearly 14%. For the past one month, the stock has dropped 17%. However, it has rallied 140% in the past one year and more than 97% year-to-date.

The recent correction in the stock price was prompted by concerns that the company's profit margins in the June 2024 quarter may taper off once the current contracts are executed.

The company posted an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 27.3% in the June quarter compared with 7.9% during the year-ago quarter.

However, for the full financial year 2024-25, EBITDA margin may be at a sustainable level of 11-12%, the company’s chairman and managing director Sanjeev Singhal told at a press meet.

He added that the company’s growth prospects remained strong given the ₹4,000-5000 crore planned capex. Mazagon Dock was also tapping into export markets to unlock more growth potential.

State-run Mazagon Dock was conferred the ‘Navratna’ status in the June 2024 quarter, which gives the company significantly higher powers.

Experts said that capex decisions can now be made by the company's board without any restriction or reference to the ministry, which could facilitate quicker executions. The company can also collaborate for significantly higher financial exposure of up to ₹1,000 crore for each collaboration or joint venture, experts noted.