Mazagon Dock Share Split: What for Investors and growth in 2025?

Is Mazagon Dock going to split?

Many investors are searching Is Mazagon going to split? So the answer is yes. The shares of Mazagon Dock Shipbuilders Ltd, which were trading at Rs.4,728.80 each, opened on Friday at Rs.2,375. This is a significant slide of 49.77%, causing surprise among many investors. But do not panic; the stock price is not because of the company's declining value; it has just undergone a stock split that has brought down the share price by nearly 50%. Many investors query the future prospects of Mazagon Dock and whether this could place them in the right time for purchase

Let's first understand the stock split in a nice brief, and we will also discuss what the future may hold for the company.

Detailed Video

What is a Stock Split?

For those new to this, a stock split occurs when a corporation divides its outstanding shares into smaller parts. This happens mainly when the stock price goes really high, which makes it unbuyable by most retail investors. Once a company splits its shares, it makes that share available to many to attract more investment. In the Mazagon Dock case, the Stock is split into 2:1 Shares, meaning that for every share an investor held before, he is now going to have two for each share.

Now that one understands well about a stock split, let us proceed to the future outlook.

Future Outlook: What Next for Mazagon Dock?

So going ahead, future stock prices will depend more on the business performance of the company in relation to its order book. Order books are very important for manufacturing companies as they directly affect the revenues generated. Without enough orders, it is very difficult for a company to grow.

Update for Q3, 2024

• Project P-75 Scorpène Submarines: Currently, five submarines have been availed so far and it is expected that the sixth submarine will be delivered before the end of 31 December 2024.

• Project-15 Bravo Destroyers: Three destroyers have so far been delivered; the fourth destroyer is also expected to be ready for delivery by 31st December 2024.

• 17 Alpha Frigates: The goal is for the first ship to be delivered by 31st December 2024.

• Deliveries in FY25: 3, big ones, will be delivered in FY25. 

Long Term Orders

Additional Scorpène Submarines: Mazagon Dock has been selected as the shipyard for 3 more Scorpène submarines. Revenue recognition for this work will be based on progress milestones. For the first submarine, execution will be over 6 years with one submarine to be delivered each year thereafter. 

Project 75I: Mazagon Dock collaborated with a German designer on this project and submitted a bid for the same. The company expects to win this order. 

MDL has signed a contract with an EU client for the construction of 3 units of 7500 DWT multi-purpose hybrid power vessels. The worth of this contract is approximately USD 42 million, and these vessels are supposed to be delivered within the next three years. 

Growth Plans

• Mazagon Dock has recently appended all 15 acres of land close to its existing yard and 40 acres of available land near JNPT, creating room for future shipbuilding and repair capabilities. 

• This expansion will position Mazagon Dock to take care of larger vessels and almost double its current capacity. 

• Plans for execution of the projects over the next 45 years are accompanied by an estimated capex plan of close to Rs.5,000 crore. 

Brokerage House Targets

• Motilal Oswal gave it a Rs.5513 price target with an upside of 16%.

• Axis Securities published price targets of Rs.4965 and Rs.5085 respectively with an upside of 6-7%.

The prices listed above were all before the stock split. Since the stock split at Rs.4728, that will be the starting price for all future gains.

Mazagon Dock Order Book

Let us check the order book of Mazagon Dock to know its future. 

A robust order book is an important aspect of the company; it is indicative of the revenue growth that is likely in the future. Future strong orders would help in propelling up the earnings and that would be for sure positive to the stock price. Now, people are hoping for the future bullish indication for Mazagon Dock in 2025. 

 

Most analysts have been optimistic about the company with the prospect of growth because of the strong order book and healthy performance; it may recover and even upward trend.

Conclusion:

To say it in a nutshell, perhaps, the stock split has caused some temporary down, but Mazagon Dock has indications for a positive future. If you are keen on buying, the business is strong on fundamentals and worth considering for long-term investment.