Mazdock Share is experiencing a sharp decline in its share price today, trading at ₹2568, down 6.17%. The stock opened at ₹2575, lower than the previous day’s close of ₹2737. During the trading session, it reached an intraday low of ₹2561 and a high of ₹2594. The decline in Mazdock share price comes in response to the government’s decision to divest up to a 4.83% stake in the defence PSU through an Offer for Sale (OFS), impacting investor sentiment.
Why is Mazagon Dock Falling?
The sudden drop in MDL’s stock price is primarily due to the government’s share sale announcement. The floor price for the OFS has been set at ₹2525 per share, which is at a significant discount to the previous closing price. Investors often react negatively to large stake sales, as they may lead to increased supply in the market, thereby pressuring prices. Additionally, short-term traders might be booking profits after the stock’s strong rally in recent months.
Government’s Offer for Sale (OFS) Details
The Indian government plans to sell up to a 4.83% stake in Mazagon Dock through an OFS, with a base sale of 2.83% and an additional 2% under the greenshoe option. The offering will be available to institutional investors on April 4, while retail investors can bid on April 7. The government aims to raise approximately ₹5,000 crore through this divestment.
Mazagon Dock’s Strong Financial Performance
Despite today’s decline, MDL has shown robust financial growth. In Q3 FY25, the company reported a 28.8% increase in consolidated net profit, reaching ₹807 crore compared to ₹627 crore in the same quarter last year. Revenue from operations also surged by 33% to ₹3,144 crore, while EBITDA jumped 51.5% to ₹817 crore. Additionally, the company announced a record interim dividend of ₹23.19 per share for FY25.
Mazagon Dock’s Order Book and Growth Prospects
MDL has a strong order book worth ₹39,800 crore as of Q2 FY25, with several significant projects lined up. These include the P75-I submarines, four P17A stealth frigates, and four next-generation destroyers. The company is also engaged in the P17 Bravo project and recently secured a ₹19,900 crore contract from the Ministry of Defence to construct an air-independent propulsion plug for submarines, enhancing endurance.
Stock Performance and Multibagger Status
Despite today’s decline, Mazagon Dock has been a stellar performer in the stock market. Over the past year, the stock has surged 145%, making it a multibagger. In the last six months, it gained 34%, and over the past month, it rose 27%. In contrast, the Sensex has only gained 4.4% in the past month and has seen a 2.8% decline YTD.
Investor Outlook: Is the Decline a Buying Opportunity?
While the short-term reaction to the OFS has caused a dip in share prices, long-term investors might see this as a buying opportunity. With strong financials, a solid order book, and a dominant position in the defence sector, MDL remains a key player in India’s shipbuilding industry. However, investors should closely watch institutional demand for the OFS and overall market sentiment before making investment decisions.