1) At a Glance – When Naval Budgets Meet Meme-Level Margins
Mazagon Dock Shipbuilders Ltd (MDL) is what happens when national security meets spreadsheet discipline. With a market cap of ₹96,942 Cr, the stock at ₹2,402 has cooled off in the last three months (-10%), even as the company keeps printing operational numbers that make most capital-goods peers sweat. Q3 FY26 sales of ₹3,601 Cr grew 14.6% YoY, PAT at ₹880 Cr rose 9% YoY, and ROCE sits at a spicy 43.2%. This is a near debt-free PSU (₹1.84 Cr debt, yes, with a decimal), paying dividends (0.72% yield) while sitting on a ₹39,872 Cr order book scheduled across 37 vessels.
The valuation? P/E ~40x, P/B ~10.9x — expensive if you squint at book value, reasonable if you price in visibility, margins, and the Defence capex flywheel. The kicker: MDL is simultaneously expanding capacity (₹5,000 Cr capex), deepening indigenisation, and lining up submarines with AIP tech. The market is moody; MDL is busy. Which side do you trust?
2) Introduction – 1774 Called, It Wants Its Shipyard Back (Still Winning)
Founded in 1774, MDL began life as a humble dry dock and somehow evolved into India’s most consequential naval shipyard. Since 1960, 800+ vessels have slid into the water — from destroyers and frigates to submarines that prefer staying invisible. MDL is Navratna, the only Indian yard to have built destroyers and conventional submarines, and the lead builder of Nilgiri-class stealth frigates.
But this isn’t a museum piece. FY24 revenue hit ₹12,330 Cr, margins expanded, debtor days improved to 34, and the cash machine kept humming. The order book is defence-heavy (as it should be), and
diversification has quietly begun — MRO for helicopters, offshore heavy engineering, and even AI-enabled inspections with IIT Madras.
The market’s concern? Valuation and lumpiness. Defence revenues are milestone-based; quarters wobble. The counter-argument? Visibility measured in years, not quarters. If patience is a moat, MDL is a medieval fortress.
3) Business Model – WTF Do They Even Do?
Think of MDL as two businesses wearing the same hard hat:
1) Shipbuilding
Commercial vessels, naval ship construction, and refits. This is where frigates, destroyers, and support vessels are born.
2) Submarine & Heavy Engineering
Diesel-electric submarines, refits, and heavy engineering jobs. This vertical is smaller by revenue mix but massive in strategic value and margins.
Revenue Mix FY24:
- Manufacturing (Submarines & Ships): 97%
- Repairs: 3%
Clients are mostly the Ministry of Defence, which means payments are secure, timelines are long, and compliance is… intense. The upside is indigenisation — MDL has achieved ~75% indigenous content in warships, reduced import dependence, and fed 1,017 items into the MoD’s Positive Indigenisation List. Translation: fewer FX shocks, better margins, and strategic stickiness.
Lazy-investor test: Is this a commodity business? No. Is switching easy? Also no. Is the moat regulatory
