Shares of Mazagon Dock Shipbuilders Ltd. rose over 3 per cent in early trade on Monday after the Ministry of Defence approved the state-run shipbuilder to begin cost negotiations with Germany’s Thyssenkrupp Marine Systems for the ambitious P-75(I) submarine project.
The stock opened at Rs 2,787, gaining 3.2 per cent from the previous close. Prior to Monday’s session, Mazagon Dock shares had fallen 6.5 per cent over the last month, paring year-to-date gains to around 20 per cent.
According to reports, the cost negotiation process for the Rs 70,000-crore project is expected to begin soon. If successful, the final award for building six conventional submarines for the Indian Navy is expected to be issued within six months.
Mazagon Dock and Thyssenkrupp had earlier signed a Memorandum of Understanding (MoU) in June 2023, outlining a partnership in which Thyssenkrupp will handle engineering and design, while Mazagon Dock will undertake the actual construction and delivery of the vessels. The project is a strategic part of India’s naval modernisation efforts under the Strategic Partnership Model.
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Despite today’s positive move, sentiment around the stock has remained cautious. In a note released last Friday, JPMorgan reiterated its “underweight” rating on Mazagon Dock with a target price of Rs 2,468. The brokerage highlighted limited incremental news flow around the P-75(I) contract and cited an unfavourable risk-reward ratio, even after the stock corrected nearly 30 per cent from its peak of Rs 3,775.
Recent earnings for Mazagon Dock have also been weighed down by cost overrun provisions, which impacted performance over the last two quarters.
Adding to the stock’s near-term triggers, Mazagon Dock is also set to be included in the Nifty Next 50 index as part of the NSE’s bi-annual rebalancing, effective end-September—a move that could boost institutional flows.
