Anand Rathi IPO report on Mazagon Dock Shipbuilders
Incorporated in Feb’1934,Mazgaon Dock Shipbuilders (MDS), a public-sector undertaking under the Department of Defence production, constructs and repairs warships and conventional submarines for the Ministry of Defence(MoD) for the Indian Navy, besides vessels for commercial clients. It has production capacity of 40,000 DWT, with two segments shipbuilding (naval shipbuilding/repairs) and submarine/heavy engineering.
Valuation and Outlook
At the IPO price, we believe the company is grossly undervalued given its strong order backlog (book-to-bill 11x FY20 revenue), potential from coming submarine orders and its net cash balance (Rs58bn in FY20).It also offers attractive dividend yield of 7.4%. We recommend subscribe.
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