Shares of state-run defence firm Mazagon Dock Shipbuilders Ltd. plummeted by as much as 13 percent over two sessions, reaching a new 52-week low of Rs 1,688.35. This significant drop followed the announcement of muted financial results for the quarter ended September 30, 2026 (Q2 FY27), which saw the company's market capitalization dip below Rs 70,000 crore.
The company reported a substantial 54.1 percent year-on-year decline in net profit, settling at Rs 749 crore. Net revenue from operations also fell by 16.5 percent year-on-year to Rs 2,446 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw an even sharper decline of 71.3 percent year-on-year, with margins contracting by 1,560 basis points to just 8.1 percent for the quarter.
Brokerage Reactions and Revised Targets
Following the weak Q2 performance, several brokerages trimmed their price targets for Mazagon Dock shares. Antique Stock Broking noted that the results were impacted by a depleting order book, delays in finalizing the P75I submarine order, and high provisions. They consequently cut their earnings estimates for FY27, FY28, and FY29 by 15.5 percent, 13.4 percent, and 12 percent, respectively.
Despite the near-term challenges, Antique Stock Broking maintained a 'buy' rating, citing a robust order funnel of Rs 2.5 lakh crore and the potential for the P75I contract to significantly boost the order book. They revised their target price to Rs 2,725 from an earlier Rs 3,276.
Choice Institutional Equities echoed concerns about order timing but reaffirmed a 'buy' rating, believing that the potential for order book replenishment is not fully reflected in short-term earnings assessments. They revised their target price to Rs 2,500 from Rs 3,100, highlighting fresh submarine orders as a key catalyst for a re-rating.
Mixed Analyst Ratings
- Buy Ratings: Dolat Capital (target Rs 2,400), Centrum Broking (target Rs 2,100), Antique Stock Broking (target Rs 2,725), Choice Institutional Equities (target Rs 2,500).
- Hold Rating: Anand Rathi (target Rs 1,956).
- Sell/Underweight/Reduce Ratings: Kotak Institutional Equities (target Rs 1,660), JP Morgan (target Rs 1,490), HSBC (target Rs 1,680).
Beyond the quarterly earnings, Mazagon Dock also announced an interim dividend of Rs 5 per share, with November 3 set as the record date. Additionally, the board approved Rs 1,250 crore in credit facilities from the State Bank of India to issue a standby letter of credit for its subsidiary, Colombo Dockyard PLC.