🔍 At a Glance

Mazagon Dock, India’s only builder of destroyers and conventional submarines, has quietly become a ₹1.28 lakh crore behemoth. With 5-year PAT CAGR of 38%, ROCE of 43%, and a stealthy 192% stock CAGR in 3 years — it’s every PSU bull’s wet dream. But is this dockyard now sailing into valuation turbulence?

1. 🎣 Introduction with Hook

Imagine a PSU that:

✅ Has no debt
✅ Builds warships & submarines
✅ Pays dividends
✅ Grows faster than most tech startups
✅ And actually makes money

Mazagon Dock Shipbuilders (MDL) is that unicorn. Well… unicorn with welding goggles.

While you were distracted by HAL and BEL moonwalking, Mazagon quietly delivered a 3x in 3 years. Not bad for a shipyard older than the American Revolution (founded in 1774, no joke).

2. 🛠️ Business Model – WTF Do They Even Do?

🛳️ Core Segments:

1. Warships – Stealth frigates (Nilgiri class), destroyers (Visakhapatnam class), corvettes
2. Submarines – Kalvari class (Scorpène) diesel-electric subs
3. Refits & Repairs – For Indian Navy
4. Commercial Ships – Meh segment, minimal contribution

🇮🇳 Only Indian yard to make both destroyers & submarines
🛡️ Strategic PSU under Ministry of Defence
🆕 Acquiring 51% stake in Colombo Dockyard – MDL goes global?

3. 📊 Financials Overview – Profit, Margins, ROE, Growth

🧮 Growth Stats:

• 3-Year Sales CAGR: 26%
• 3-Year PAT CAGR: 57%
• EPS (FY25): ₹59.8

Margins are climbing faster than India’s defense budget.

4. 💸 Valuation – Is It Cheap, Meh, or Crack?

🧠 Other Income = ₹1,121 Cr (~46% of PBT) — this is basically a warship-making NBFC

📏 Fair Value Range Estimate:

• Assuming 20–25% sustainable PAT CAGR
• Apply PEG of 1.25 on FY26 EPS ~₹75
  → FV Range: ₹2,200 – ₹2,600 (P/E 30–35x)

At 53x P/E, you’re not buying a PSU… you’re buying Hindustan Unilever in camo paint.

5. 🚨 What’s Cooking – News, Triggers, Drama

🧨 Key Updates:

• 🛳️ New submarine orders from Navy expected post Kalvari success
• 🌊 Global expansion via Colombo Dockyard buy
• 🪖 Stealth frigates (Nilgiri class) progressing well
• 💸 Order book ~₹38,000+ Cr, strong pipeline from MoD
• 📉 Q4 FY25 profit dropped 50% QoQ (base effect + cost spike)

⚠️ Risk: Dependency on MoD — 90%+ of revenue is defense-only

6. 💼 Balance Sheet – How Much Debt, How Many Dreams?

TL;DR: Zero debt + war chest of cash = PSU version of a well-fed dragon.

7. 📈 Cash Flow – Sab Number Game Hai

Key Takeaways:

• Operating cash > Net profit = clean books
• Massive cash pile = optionality for M&A, dividends

8. 📐 Ratios – Sexy or Stressy?

PSU behaving like a startup? Almost.

Only red flag: Over-reliance on “Other Income”.

9. 🧾 P&L Breakdown – Show Me the Money

FY25 Breakdown:

• Revenue: ₹11,432 Cr
• Operating Profit: ₹2,060 Cr
• Other Income: ₹1,121 Cr
• Net Profit: ₹2,414 Cr
• EPS: ₹59.83
• Dividend Payout: 22% (₹13.16/share)

Pure ops profit is solid, but 45% of PBT still from treasury. Take that into FV math.

10. 🧬 Miscellaneous – Shareholding, Promoters, Drama?

⚠️ Ultra-low float = high volatility
🥱 No OFS announced yet — but pressure is building

Also: 6.7 lakh+ shareholders now. Mass retail = mass love = mass panic (if results slip).

11. 🧠 EduInvesting Verdict™

Mazagon Dock is a rare PSU that doesn’t suck:

✅ High ROE/ROCE
✅ Order visibility
✅ Margin expansion
✅ Global ambitions (Colombo acquisition)
✅ Clean cash flow

But the market already knows.

At 53x P/E, you’re paying for both the submarine and the admiral’s pension fund.

🧾 Final Word:

• Great company? Yes.
• Great price? Not so sure.
• Unless the Navy announces a dozen more stealth boats next month, expect valuation gravity to apply.

This ship’s not sinking… but it’s priced like it already conquered the Atlantic.

✍️ Written by Prashant | 📅 June 28, 2025

Tags: Mazagon Dock, PSU stocks, shipbuilding, Indian Navy, submarine makers, defense stocks, multibagger PSU, HAL, Cochin Shipyard, EduInvesting