MAZDOCK - Mazagon Dock

📊 NSE: MAZDOCK 🏢 Miscellaneous 📅 Last Updated: 12/14/2025 9:42

💰 Financial Performance

Revenue Growth by Segment

Revenue from operations grew 6% YoY to INR 2,929 Cr in Q2 FY26. Segmental growth is driven by Shipbuilding (P17A Frigates) and Submarine/Heavy Engineering (P75 Submarines), with the order book standing at INR 27,415 Cr.

Geographic Revenue Split

100% domestic revenue contribution, primarily from the Indian Navy, Indian Coast Guard, and ONGC (INR 4,800 Cr order).

Profitability Margins

Operating margin improved significantly to 23% in Q2 FY26 from 18% in Q2 FY25. PAT margin for Q2 FY26 was approximately 24.4% (INR 715 Cr on INR 2,929 Cr revenue).

EBITDA Margin

EBITDA margin stood at 23% in Q2 FY26, a 500 bps increase from 18% in Q2 FY25. EBITDA grew 25% YoY to INR 971 Cr.

Capital Expenditure

Planned expansion includes ramping up a commercial shipyard's revenue capacity by 50%, from INR 1,000 Cr to INR 1,500 Cr within the next 2 years.

Credit Rating & Borrowing

The company maintains a strong liquidity position with minimal borrowings, resulting in negligible interest costs and a high interest coverage ratio.

⚙️ Operational Drivers

Raw Materials

Naval grade steel, specialized propulsion systems, weapon integration components, and electronic sensors. Subcontracting costs represent a significant variable expense, noted as high in Q2 FY26 due to offshore projects.

Import Sources

Sourced from India (SAIL), Japan (Onomichi Shipyard association), Europe, and Scandinavia for high-tech naval components.

Key Suppliers

Key suppliers include SAIL for steel and various specialized global and domestic defense technology vendors. ONGC is a major client for offshore platforms.

Capacity Expansion

Current revenue capacity is approximately INR 12,500 Cr. Expansion plans focus on commercial shipbuilding and repair, targeting a 50% revenue increase in that segment to INR 1,500 Cr.

Raw Material Costs

Raw material and subcontracting costs are managed through conservative booking at project starts. Subcontracting costs spiked in Q2 FY26 due to the complexity of offshore projects.

Manufacturing Efficiency

Internal efficiencies and quality of workmanship have driven margins up from 5% (8-10 years ago) to current levels of 18-23%.

📈 Strategic Growth

Expected Growth Rate

9.34%

Growth Strategy

Growth will be achieved through the execution of the P17A Frigate project (4th ship delivery next year), signing new P75 submarine contracts (negotiations ongoing), and ramping up commercial shipbuilding/repair revenue by 50% through public-private partnerships.

Products & Services

Naval Destroyers, Frigates (P17A), Submarines (P75), Multi-Purpose Vessels (MPV), and Offshore Platforms for the oil and gas sector.

Brand Portfolio

Mazagon Dock Shipbuilders Limited (MDL).

New Products/Services

P75 Submarines (new contract expected by end of FY), Air Independent Propulsion (AIP) systems, and expanded commercial ship repair services.

Market Expansion

Expanding into commercial shipbuilding and repair markets, leveraging associations with Japanese and European shipyards to target a 50% revenue ramp-up.

Market Share & Ranking

Leading shipyard in India for complex naval platforms like destroyers and submarines.

Strategic Alliances

Strategic alliance with Swan Shipyard for joint RFP bids to combine MDL's design expertise with private infrastructure flexibility.

🌍 External Factors

Industry Trends

The industry is shifting toward public-private partnerships and 100% indigenization. The commercial repair segment is growing, with MDL targeting 50% growth in this area.

Competitive Landscape

Key competitors include other defense PSUs and emerging private shipyards, though MDL maintains a lead in high-complexity vessels.

Competitive Moat

Durable moat built on specialized design expertise, weapon integration capabilities, and a long-term relationship with the Indian Navy. These are sustainable due to high entry barriers in defense manufacturing.

Macro Economic Sensitivity

Highly sensitive to the Indian Defense Budget and government indigenization policies (Atmanirbhar Bharat).

Consumer Behavior

N/A (B2G model).

Geopolitical Risks

Geopolitical tensions drive demand for naval modernization, benefiting the order book, but global supply chain disruptions can delay specialized component imports.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Defense Procurement Procedure (DPP), naval technical standards, and the Companies Act 2013.

Taxation Policy Impact

Effective tax rate for FY25 was approximately 25.2% (INR 784.32 Cr tax on INR 3,109.20 Cr PBT).

Legal Contingencies

Secretarial Audit for FY25 confirmed compliance with statutory provisions; no major pending court case values were disclosed in the provided snippets.

⚠️ Risk Analysis

Key Uncertainties

Fixed-price contract margin pressure (potential 5-10% impact if costs escalate), project delivery delays, and order book conversion risks due to client budgetary constraints.