ICICI Direct's IPO report on Mazagon Dock Shipbuilders
Mazagon Dock Shipbuilders (MDL) is a DPSU under Ministry of Defence (MoD) with maximum capacity of ~40000 DWT, engaged in construction, repair of warships and submarines for MoD. It is India’s only shipyard to have built destroyers and conventional submarine for Indian Navy and one of the initial shipyards to manufacture corvettes in India. It primarily operates in two divisions viz i) shipbuilding under which it is currently building four P-15 B destroyers, four P-17A stealth frigates and ii) submarine & heavy engineering division under which it is currently building or in the process of delivering four Scorpene class submarine under transfer of technology from Naval group, France and a medium refit & life certification submarine.
Valuation and Outlook
Considering the strong order book, superior infrastructure facilities, debt free status, one can expect better growth outlook for the company in the long run. At the higher end of the price band of Rs 145, the stock is available at a P/E of ~6.1x (on post issue basis). We recommend SUBSCRIBE on the issue with a view of listing gains.
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