Analyst Concall
Mazagon Dock to spend INR 50 bln in 4-5 yrs to up capacity
This story was originally published at 22:03 IST on 5 November 2024
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--Mazagon Dock: Targeting delivery of 3 frigates by FY26
--CONTEXT: Comments by Mazagon Dock mgmt in post-earnings conference call
--Mazagon Dock: Aim to bag advanced destroyer ship contracts from Indian Navy
--Mazagon Dock: Aim to bag advanced frigate ship contracts from Indian Navy
--Mazagon Dock: Appointed consultants to build two dry docks
--Mazagon Dock: Dry docks to be operational 4 yrs after construction begins
--Mazagon Dock: Looking at scaling up non-defence maritime vessels business
--Mazagon Dock:To target more export orders after new docks come up in 4-5 yrs
--Mazagon Dock: Delivery of one Scropene-class submarine in Dec on schedule
--Mazagon Dock:Delivery of P-15 Bravo class destroyer to Navy before schedule
--Mazagon Dock: Govt sops on environ-friendly shipbuilding may not benefit co
--Mazagon Dock: Delivery of 1 Project-17 Alpha frigate to Indian Navy delayed
--Mazagon Dock: Looking at 10-12% revenue growth in FY25
--Mazagon Dock: Will spend INR 50 bln over 4-5 yrs to up production capacity
--Mazagon Dock: Will use INR 40 bln cash balance to fund capacity expansion
By Ayush Kumar and Avishek Rakshit
MUMBAI – Mazagon Dock Shipbuilders Ltd. is set to spend around INR 50 billion in the next 4-5 years to increase its shipbuilding capacity, Chairman and Managing Director Sandeep Singhal said Tuesday. The major part of its planned capital expenditure will be used to build two dry docks.
The first dry dock will come up on a 15-acre land parcel adjunct to their existing yard, and the second will come up on a 40-acre land parcel close to Nhava Sheva near Jawaharlal Nehru Port. The company has appointed consultants to build these dry docks which are expected to augment this defence public sector company's commercial shipbuilding capacity, Singhal told investors after declaring the company’s financial results for Jul-Sept.
The company beat the Street's expectations for its net profit as well as revenue in Jul-Sept owing to robust order inflows. It reported a 50% on-year rise in revenue, the highest in six quarters, to INR 27.57 billion, against analysts' estimates of INR 21.48 billion. The company's net profit for the quarter came in at INR 5.85 billion, up 75.7% on year, above the Street estimates of INR 4.51 billion. The profit growth in Jul-Sept was the strongest since the quarter ended December of 2022-23 (Apr-Mar). As of Sept. 30, Mazagon Dock had a total order book of INR 398.72 billion.
The shipbuilder is currently executing three projects. It has delivered five out of six Scorpene-class submarines under Project-75. The company has delivered three out of four Project 15 Bravo destroyers to the Indian Navy. The sixth submarine and the fourth destroyer will be delivered by Dec. 31. It is also looking to deliver its first stealth frigate of Project 17 Alpha by the end of this calendar year. It said it plans to deliver three more frigates under Project 17 Alpha in FY26.
The company is looking at a 10-12% on-year revenue growth in FY25. It said it has a cash balance of INR 40 billion to fund capacity expansion. The company with its existing capacity currently handles 11 submarines and 10 warships which are at various stages of construction.
The shipbuilder also plans to scale up its non-defence maritime vessels business, after expanding its captive capacity to accommodate large vessels, which is expected to be operational in the next four years. It plans to explore the green shipbuilding market in which a 30% incentive is offered by the government. This is currently not applicable on platforms which have weapons. It is also targetting more export orders once its new docks are built.
On Tuesday, shares of the company closed 4.2% higher at INR 4,196.80 on the National Stock Exchange. End
Edited by Tanima Banerjee and Akul Nishant Akhoury
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