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Informist, Friday, Feb. 7, 2025

--Mazagon Dock: Pursuing export orders, depending on bilateral treaties

--CONTEXT: Comments by Mazagon Dock's mgmt in post-earnings analyst concall

--Mazagon Dock: Expect call on refits for current Scorpene submarines FY26

By Akshita Kumar

MUMBAI – Mazagon Dock Shipbuilders Ltd. is likely to report margins for the next 2-2.5 years which could be higher than industry standards on account of execution of the current margin-accretive orders. However, once the orders are completed, margins may normalise and depend on market conditions, Chairman and Managing Director Sanjeev Singhal said Friday.

On account of the quality of the current order book, Mazagon Dock has been reporting margins of 20-21%. However, the normal margin for the shipbuilding industry is 12-15%. "This (margin) is based on the orders which were legacy orders continuing for quite some time," Singhal told sector analysts in a teleconference after the company declared its results for the December quarter. "The order profile is changing and a normal margin for this kind of industry would be in the range of 12-15%." 

Singhal said margins should be somewhat at current levels in the upcoming financial year as the legacy orders are executed, and is optimistic of reporting continued growth momentum in the company's top line and bottom line.

As of Dec. 31, the company's total order book was worth nearly INR 348 billion, and included orders for P15B destroyers, P17A stealth frigates, and P75 Kalvari class submarines. The top official said the primary focus is on executing existing orders from the Indian Navy and Indian Coast Guard, and was hopeful that the navy would decide on refitting its existing Scorpene submarines in the financial year 2025-26 (Apr-Mar), an order the company is eyeing.

Singhal, who is also the company's director of finance, said Mazagon Dock is eyeing export opportunities, but the outcome will depend on bilateral treaties and other factors. "They (exports) don't happen overnight because there are a lot of issues involved..., bilateral issues basically. At the moment, we have started some export to Malaysia, but that's at a very small scale. As and when things get crystallised, they will (get converted) into export orders, but it doesn't happen in a hurry," he said. Singhal added that Mazagon Dock will continue to pursue the export leads. 

The company reported a consolidated net profit of INR 8.07 billion, up 28.8% on year, during market hours Friday. Its consolidated top line for the quarter was INR 31.44 billion, up 33% on year. Shares of the company closed 1.4% higher at INR 2,230.20 on the National Stock Exchange.  End

Edited by Rajeev Pai

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