Shares of Mazagon Dock Shipbuilders opened at Rs 2,375 apiece on Friday, reflecting a nearly 50% decline from the previous close of Rs 4,728.80. The sharp drop surprised many investors, but the apparent plunge was due to the stock split, which adjusted the face value from Rs 10 to Rs 5 per share.
Certain trading apps may be displaying the unadjusted previous closing price, leading to the perception of a 50% fall. Adjusted for the split, Mazagon Dock shares were trading 2.13% lower on the Bombay Stock Exchange (BSE) at 11:09 am. In the previous session, the stock registered gains as more people bought it before the stock split adjustment.
The stock split aligns with the Department of Investment and Public Asset Management (DIPAM) guidelines on capital restructuring. According to the company, the move aims to enhance liquidity and encourage broader participation from retail investors.
Mazagon Dock is a leading shipbuilder in India and specialises in constructing advanced vessels for the Indian Navy and Coast Guard.
Since its inception, it has built 802 vessels, including warships, submarines, and commercial ships. It is on track to complete significant projects by December 2024, such as the 6th Scorpene submarine, the final 15B destroyer, and the first 17A frigate.
The company also competes for additional defense projects, including three Scorpene submarines under Project 75I, in partnership with a German designer. It has outlined plans to double its capacity by acquiring 55 acres of land near its existing facilities, with a capex of Rs 5,000 crore spread over the next five years.
Mazagon Dock maintains strong financial health, with Rs 4,000 crore in reserves earmarked for capacity expansion. The company has reduced dividend payouts to prioritize growth.
Arihant Capital Markets highlighted that Mazagon Dock’s profit margins are benefiting from cost efficiencies and timely project completions. Margins are expected to normalize between 12% and 15% in the long term.
Despite minor delays, Mazagon Dock remains optimistic about its schedule, with its strategic expansion plans solidifying its position in the defense shipbuilding industry.
