Mazagon Dock Shipbuilders, a leading shipbuilding company, witnessed a substantial surge in its share price as investors eagerly anticipated the possibility of securing a new order. According to reports, the Ministry of Defence has granted clearance for the procurement of three additional Scorpene or Kalvari class submarines, just ahead of Prime Minister Narendra Modi's visit to France. These submarines will be built at Mazagon Dock Shipbuilders' facility in collaboration with France-based Naval Group.
The news of the potential order win has sparked a wave of optimism among investors, propelling the company's shares to reach an all-time high of Rs 1565.80, marking an 8 percent surge. This surge is attributed to the expectation that the new orders will contribute to replenishing the company's order book, which has been experiencing a decline in recent times.
The Ministry of Defence's clearance for the procurement of three submarines is seen as a significant development. The deal is anticipated to be finalized during Prime Minister Modi's visit on July 13-14, with an estimated contract value ranging between Rs 20,000-22,000 crore.
At 9:36 am, shares of Mazagon Dock Shipbuilders were trading 7.7 percent higher at Rs 1,555.9 on the Bombay Stock Exchange (BSE), reflecting the positive sentiment surrounding the potential new order. This development is particularly encouraging for the company as its submarine facility is currently engaged in the construction of only one submarine, despite having the capacity to build 11 submarines, as highlighted by ICICI Securities.
The pending order backlog in the P75 project stands at Rs 4,255 crore out of the total backlog of Rs 38,755 crore as of March-end 2023. The domestic brokerage firm emphasized the significance of the contract, stating that it could help Mazagon Dock Shipbuilders bolster its depleting order book, which declined from Rs 46,000 crore in FY22 to Rs 38,755 crore by the end of FY23.
Market analysts eagerly await further updates on the contract signing and its potential impact on the company's future growth prospects.
