PSU defence stock crashes 7% after Govt of India plans to sell up to 4.83% stake in the Co via OFS

The shares of the leading defence company plummeted by up to 7 percent after the Government of India is set to sell up to a 4.83 percent stake in the company via an offer-for-sale (OFS) on April 4 and April 7. 

Price movement 

With a market capitalization of Rs 1.03 lakh crore, the shares of Mazagon Dock Shipbuilders Ltd were trading at Rs 2,553.60 per share, decreasing around 6.65 percent as compared to the previous closing price of Rs 2,735.45 apiece. 

Reason for Rise 

The shares of Mazagon Dock Shipbuilders Ltd have seen a bearish movement after the Government of India is set to sell up to a 4.83 percent stake in the company via an offer-for-sale (OFS) on April 4 and April 7. The OFS includes a base issue size of 2.83 percent and a greenshoe option of 2 percent. The floor price for the offer will be Rs 2,525 per share. 

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Financial Performance 

Mazagon Dock Shipbuilders Limited (MDL) delivered strong Q3 FY25 results with current margins at 20–21 percent, driven by legacy orders. However, management expects sustainable margins to normalize to 12–15% at the PBT level, aligning with broader industry standards going forward. 

Order Book and Future Orders 

As of December 31, 2024, the company holds an order book worth ₹34,787 crore. It anticipates orders for three P-75 submarines by March 2025. With MDL as the sole technically qualified bidder for P-75(I), commercial discussions are expected to begin soon for FY26 placement. 

Capex Plans 

The company has outlined a Rs 5,000 crore CAPEX plan over the next 4–5 years, including development of adjacent land with a graving dry dock and expansion of the Nhava Yard. For FY25–26, the initial investment is projected at approximately Rs 500 crore. 

Company Overview 

Mazagon Dock Shipbuilders Limited is engaged in building and repairing of ships, submarines, various types of vessels, and related engineering products. The Company is into the construction of warships and submarines. It is also engaged in the production of defense equipment. 

Written by Abhishek Singh

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