Mazagon Dock Share Price: Why Defence PSU Stock Is Falling Today?

Shares of Mazagon Dock Shipbuilders Ltd. came under pressure on Friday, tumbling as much as 7% in early trade, after the state-run defence Public Sector Unit (PSU) reported a sharp drop in its March quarter earnings. The results were announced post market hours on Thursday.

Adding to the volatility was the stock’s Futures & Options (F&O) debut, which coincides with the beginning of the June series. As of mid-day, the stock had recouped some of its losses and was trading 5% lower at Rs 3,569, snapping a seven-day winning streak.

Also Read: Mazagon Dock Declares Interim Dividend, Announces Record Date: Check Details | Republic World

Profit Halves, Margins Squeeze

Mazagon Dock's net profit for Q4 fell nearly 50% year-on-year, while EBITDA plunged more than 80%, reflecting a significant hit to operational efficiency. Margins contracted sharply to 2.8%, down from over 16% in the year-ago period.

The sharp decline was largely attributed to a spike in employee benefit and subcontracting costs, which weighed heavily on the company’s bottom line, according to the company.

Annual targets exceeded

Despite the weak quarterly performance, Mazagon Dock managed to surpass its full-year revenue and margin guidance, offering a silver lining in an otherwise lacklustre report.

During its December-quarter earnings call, the management had flagged provisions related to “excess inventory” from ships with expired warranties. These components, though still in usable condition, were set aside as a precaution. The company clarified that these provisions would be reversed once the components are deployed in future projects.

About the company

It is to be mentioned that Mazagon Dock Shipbuilders Limited (MDL) is a leading homegrown Defense Public Sector Undertaking (DPSU) shipyard under the Ministry of Defence. It's known for building and repairing ships, submarines, and various types of vessels.