Synopsis:- A defence PSU shows mixed signals as order book declines to ₹23,758 crore, yet strong sector pipeline of ₹2.3 trillion supports the outlook. With a ₹3,060 target implying 23% upside and steady margins near 25%, future growth hinges on large upcoming submarine and warship orders.
India’s defence shipbuilding sector is witnessing a structural upswing, driven by over ₹2.3 trillion of projects in the pipeline, including destroyers, frigates, submarines and support vessels. In FY26, naval fleet‑procurement spending is expected to reach around ₹24,400 crore, with more than 60 vessels under construction and roughly 70–80 in the planning stage, underscoring the sector’s multi‑year growth runway.
With a market capitalisation of Rs 1,00,623.14 crore, on Monday, the shares of Mazagon Dock Shipbuilders Ltd closed at Rs 2,494.50 per share, an increased around 1.02 percent as compared to the previous closing price of Rs 2,469.355 apiece.
Brokerage Recommendation
ICICI Direct has maintained a positive outlook on the defence stock, assigning a ‘Buy’ rating with a target price of ₹3,060. This implies a potential upside of around 24% from the current level of ₹2,469, reflecting confidence in the company’s future growth and order pipeline visibility.
As per the brokerage, revenue growth has moderated to around 11% YoY in 9MFY26, mainly due to a declining order book. The backlog has reduced significantly from ₹49,700 crore in FY21 to ₹23,758 crore by Dec-25, indicating lower near-term execution visibility despite a still healthy pipeline of ongoing defence contracts.
The current order book, at 1.9x TTM revenue, is largely driven by key projects like P17A frigates, contributing nearly 42%. Most of these contracts are expected to be executed over the next 2–3 years, supporting revenue visibility through FY26 and FY27 before fresh orders meaningfully contribute to growth thereafter.
Looking ahead, growth is expected to revive post FY27E with anticipated large contract wins. Projects such as three additional submarines and six next-generation submarines are likely to be finalised soon, potentially boosting revenue momentum. The brokerage estimates a steady revenue CAGR of around 12% over FY25–FY28E.
Order pipeline remains strong, supported by major defence opportunities like P-75I submarines (~₹99,000 crore), Kalvari-class submarines, and future frigates and destroyers. Additionally, expansion plans, MoUs, and commercial shipbuilding opportunities provide long-term visibility, ensuring sustained order inflows and reinforcing confidence in the company’s structural growth outlook.
Financial Highlights
The company reported solid Q3FY26 performance, with revenue rising 15% from ₹3,144 crore to ₹3,601 crore, reflecting strong demand and execution. However, net profit grew at a slower 9%, from ₹807 crore to ₹880 crore, indicating margin pressure. Overall, while top-line growth remains robust, profitability expansion appears relatively moderate compared to revenue growth.
Over the past year, operating performance has shown great improvement. Operating profit increased from ₹817 crore in Dec 2024 to ₹887 crore in Dec 2025, indicating better execution. Meanwhile, OPM remained healthy, moving from 26% to 25%, despite minor fluctuations during the year, reflecting stable margins and efficient cost management across operations.
Mazagon Dock Shipbuilders Ltd is a leading defence public sector undertaking engaged in building warships and submarines for the Indian Navy. With decades of expertise, it plays a crucial role in India’s indigenous defence manufacturing. The company benefits from a strong order book and a rising focus on naval modernisation.
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