Hold Mazagon Dock Shipbuilders; target of Rs 1025: ICICI Direct

ICICI Direct's research report on Mazagon Dock Shipbuilders

Mazagon Dock Shipbuilders (MDL) is engaged in the construction and repair of warships and submarines for the Ministry of Defence (MoD) to be used by the Indian Navy along with other vessels for commercial clients · MDL is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy · Over the last 10 years, MDL’s revenue increased at 10.5% CAGR over FY13- 22 while EBITDA and PAT increased at 3.6% and 3.9% CAGR, respectively, during the same period due to a fall in operating margins.

Outlook

We downgrade our recommendation on the stock from BUY to HOLD. We value MDL at Rs 1025 on 22x P/E on FY24E EPS basis.