Mazagon Dock IPO Review

Mazagon Dock Shipbuilders IPO is the first initial public offer for financial year 2021 from the Government stable. Mazagon Dock IPO opens on September 24 in the price band of Rs 135-145 per share. The initial public offering (IPO) of 3,05,99,017 equity shares of the state-owned defence company is an offer for sale by the government of India. The total offer will constitute 15.17 percent of the post-issue paid-up equity. Mazagon Dock Shipbuilders Limited, which takes pride in calling itself “Ship Builder to the Nation”, is one of India’s leading Defence public sector undertaking shipyard under the Ministry of Defence.

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Mazagon Dock IPO Details

Issue PeriodTue. Sep 29, – Thu, Oct 01, 2020
Issue DetailsOffer for Sale of 30,599,017 Equity Shares
Issue Size (₹ Cr)₹ 413 – 444 Cr
Price Band₹ 135 – 145
Bid Lot103 shares
Employee portion345,517 Equity Shares
Issue Structure : 
QIB50% of the Net offer
NIB15% of the Net Offer 
Retail 35% of offer ( 10,588,725 Equity Shares – ₹ 154 Cr) 
Application for 1x retail                                                                  1,02,803
BRLMsAxis Capital, Yes Securities, Edelweiss Financial, IDFC Securities, JM Financial
RegistrarAlankit Assignments Limited

About Mazagon Dock

  • Mazagon Dock Shipyard Limited is a defence public sector undertaking shipyard under the Department of Defence Production, MoD with a maximum shipbuilding and submarine capacity of 40,000 DWT, engaged in the construction and repair of warships and submarines for the MoD for use by the Indian Navy and other vessels for commercial clients.
  • The company is CPSE conferred with the ‘Mini-ratna-I’ status in 2006, by the DPE. It is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy. It is also one of the initial shipyards to manufacture Corvettes (Veer and Khukri Class) in India.
  • The business divisions in which the company operates are
    • (i) shipbuilding and
    • (ii) submarine and heavy engineering.
  • Its shipbuilding division includes the building and repair of naval ships.
  • Its submarine and heavy engineering division includes building, repair and refits of diesel electric submarines.
  • Since 1960, it has built a total of 795 vessels including 25 warships, ranging from advanced destroyers to missile boats and three submarines. It has also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessels, water tankers, tugs, dredgers, fishing trawlers, barges and border outposts for various customers in India as well as abroad.
  • Its Order Book currently comprises of building and construction of four ‘P-15B’ destroyers, four ‘P-17A’ stealth frigates, repair and refit of a ship, four Scorpene class submarines and undertaking the medium refit and life certification of a submarine for the Indian Navy.

Mazagon Dock: Financials

Total Revenue246.59754.71784.11779.99
Revenue Growth (%)-3.75%0.53%
Profit Before Tax64.63118.77128.19160.03
Profit for the Period47.382.3579.84107.09
Net Profit as % to Revenue19.18%10.91%10.18%13.73%
Equity Share Capital72727272
Reserves as stated567.09519.42459.44401.58
Net worth639.08591.42531.44473.57
EPS (₹ )6.5711.4411.0914.91
RONW (%)7.40%13.92%15.02%22.61%
NAV (₹ )88.7782.1573.8265.78
Equity Post IPO81.8
IPO Price306
EPS (Post Issue) FY2010.07
PE FY2030.40
EPS annualized Q1FY2123.13
PE Post IPO annualized13.23
Market Cap2503


  • Only PSU defence shipyard constructing conventional submarines
  • World class infrastructure capable of serving the needs of cuntrys defence.
  • Location of facilities promotes better association with its vendors and customers
  • Increase in indigenization of vessels and implementation of the “Make in India” campaign
  • Established track record with strong financial position and strong order book
  • Experienced board and senior management team and skillfully trained workforce
  • Defence shipbuilding order book is expected to show healthy growth due to security concerns.


  1. Subdued economic activities and delays post Covid19.
  2. Change in defence procurement policy, nomination policy and lower defence budget
  3. Liquidate Damages due to project execution delay
  4. Increased competition expected as the sector is opened slowly tp private sector.
  5. Difficulty in maintaining the profitability

Mazagon Dock: Comparison with Listed Peers

  • As on 31st March 2020
Name of the companyCMPFVEPSNAVPERoNW (%)
Mazagon Dock  1023.65152.176.1315.54%
Cochin Shipyard 317.751048.05283.027.616.98%
Garden Reach Shipbuilders173.31014.2790.8114.917.01%

Mazagon Dock IPO: Assessment

  • According to the CRISIL Report, the financial market in India is expected to continue to grow in line with its historical trajectory, driven by strong demand and supply-side drivers, such as the expected growth in the Indian economy, increasing urbanization, more option for investments, availability of large amount of data and apps and increase in usage of digital platforms.
  • Mazagon Dock is the only shipyrd to make submarines an destroyers in the country/.
  • As of July 31, 2020, Order Book from the MoD was Rs 54074 crore which constitutes 10.8 times its FY20 revenue thereby providing good earnings visibility
  • Defence shipbuilding order book to grow 8-10% CAGR over the next 5 years as shown below
  • The company has an uninterrupted dividend track record for the last 15 years.
  • Mazagon Dock is commanding GMP of Rs. 120 in the grey market. (26-09-20)
  • The company bought back 24900000 equity shares at Rs. 101.80 in Dec 2017 and 22410000 equity shares at Rs. 124 in Mar 2020.
  • Several IPO issues are likely to dampen high listing gains seen in recent times.
  • In the past many PSUs including Defence PSUs like BDL, HAL their IPO & subsequent OFS have not lived upto the expectations of investors.
  • Operational efficiency wise CPSEs have a poor track record and Mazagon Dock Shipbuilders may be no different.
  • The near term performace of Mazagon Dock Shipbuilders may get affected due to COVID Lockdown in Q1FY21 and problems persisting thereif.
  • Despite a PSU tag, looking at reasonable valuations vis a vis its peers, as well as its financial performance and expected growth in orders, I intend to apply in Mazagon Dock IPO.
  • Do check this page for any last minute updates

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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