Shares of Mazagon Dock Shipbuilders Ltd. climbed 2.69% on Friday, closing at Rs 2,382.15, following the state-run defense shipbuilder's announcement of its June quarter (Q1 FY27) earnings. The company reported a robust performance, leading several brokerages to reaffirm their positive outlook on the stock, with some forecasting significant upside.
Q1 FY27 Performance Highlights
Mazagon Dock delivered a solid Q1 FY27, with key financial metrics showing healthy year-on-year growth. Revenue increased by 12%, while EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a substantial 48% rise. Profit After Tax (PAT) also grew by 22% during the quarter.
The company attributed its revenue growth to strong execution across several critical projects, including the Project 17A frigates, ongoing submarine refits, and a significant order from ONGC. This consistent project delivery underpinned the positive financial results.
Brokerage Outlooks and Target Prices
Antique Stock Broking
Antique Stock Broking reiterated its 'BUY' rating for Mazagon Dock, maintaining its 12-month target price at Rs 3,275. This target suggests a potential upside of 37.48% from Friday's closing price. While Antique anticipates revenue growth to moderate slightly in FY27-28E, it believes that the execution of major contracts could accelerate growth in subsequent years. The brokerage also highlighted the expected finalization of the Project 75I (P75I) submarine program in the coming weeks, which could reverse the current declining trend in the company's order book.
Choice Institutional Equities
Choice Institutional Equities also maintained its 'BUY' rating and an unchanged target price of Rs 3,100, indicating an upside potential of 30.13%. Choice acknowledged a mixed quarterly performance but emphasized the significant margin expansion, with EBITDA margin reaching 15.2%. This improvement was attributed to the normalization of provisions and a favorable cost mix, although Choice noted that sustainability would depend on project mix and provisioning cycles.
Choice Institutional Equities remains constructive on Mazagon Dock's long-term prospects, citing the company's strategic position in high-complexity defense platforms with limited domestic competition.
The brokerage also pointed to management's ambition to expand the order book to approximately Rs 1 lakh crore by FY27E, which, if achieved through timely execution and project awards, could drive multi-year earnings growth.
HDFC Securities
In contrast, HDFC Securities maintained an 'ADD' rating but adjusted its target price downwards to Rs 2,625 from the earlier Rs 3,000. HDFC Securities expects Mazagon Dock to sustain revenue growth over the next few years, bolstered by a robust pipeline of long-cycle projects involving submarines, frigates, and destroyers. The expected order value for six next-generation submarines alone is estimated at around Rs 99,000 crore, with frigates and destroyers potentially adding another Rs 1.5 lakh crore to the order book. However, HDFC Securities now projects a 7% PAT CAGR over FY26-FY29E, a slight reduction from its previous 8% forecast, leading to a revised valuation multiple despite a constructive long-term view.
Long-Term Outlook
The medium-term outlook for Mazagon Dock remains largely positive, driven by a significant ordering cycle anticipated from the Indian Navy. This includes opportunities across P75I submarines, three additional submarines under Project 75, landing platform docks (LPDs), Project 17B frigates, mine countermeasure vessels (MCMVs), and destroyers. These large-scale defense projects are expected to underpin the company's growth trajectory for years to come.