Embark on a voyage of exploration as we delve into the captivating world of Mazagon Dock Share, a company that has successfully navigated the tumultuous tides of the stock market, emerging as a beacon of triumph in the shipbuilding industry. Join us as we uncover the secrets behind their resounding success and discover the remarkable story of Mazagon Dock’s rise to prominence.
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Mazagon Dock Shipbuilders – About the company
The company provides ship building services. It builds and repairs ships, barges, and off-shore drilling rigs. The firm operates through two major segments; Shipbuilding and Submarine. It offers services to the Indian navy, oil and gas exploration companies, and other commercial customers throughout India and internationally.
It was established as a private company in 1934. Mazagon Dock underwent a significant transformation when it came under the ownership of the Government of India in 1960. This pivotal change propelled the company onto a remarkable trajectory, shaping its evolution into a prominent force within the shipbuilding industry.
Future Of ship building sector in India
According to India’s Maritime Vision 2030 released in 2021, shipbuilding was identified as one of the top ten essential areas to establish the country as a global maritime leader.
India’s 2023/24 annual budget presented to parliament unveiled Finance Minister Nirmala Sitharaman’s proposed strategy to rejuvenate the domestic shipbuilding industry. The plan encompasses measures such as cash subsidies, tax reduction, and granting shipbuilding an infrastructure status. These initiatives aim to facilitate easier access to bank financing for the industry.
Reliable sources indicate that senior government officials, in discussions with Reuters, have hinted at the establishment of a maritime development fund worth $123 million. Notably, this proposal enjoys the backing of Prime Minister Narendra Modi’s economic advisors.
Presently, India boasts a total of 28 shipyards, with six operating under the Central Public Sector, two managed by state governments, and the remaining 20 under private ownership.
A Report by BY THE MARITIME EXECUTIVE
In light of the industry’s dynamics, the Federation of Indian Export Organizations (FIEO) has been actively advocating for reforms within the shipbuilding sector.
UPCOMING PROJECTS
1. Germany’s Thyssenkrupp and India’s Mazagon Dock Shipbuilders have teamed up to build six submarines for the Indian Navy, a deal estimated to be worth about $5.2 billion. According to Thyssenkrupp’s statement, the collaboration outlines Thyssenkrupp’s role in engineering and design, while Mazagon Dock will handle construction and delivery as per the Indian Navy’s tender.
2. The company has announced that the fourth ship of project 17A (Nilgiri class) will be launched on 01 Sep 23 at 1224 Hrs from MDL premises at Mumbai. Honble Vice President of India, Shri Jagdeep Dhankhar will be the Chief Guest of the Occasion and the Ship will be launched and named by Dr (Shrimati) Sudesh Dhankhar wife of Honble Vice President.
Mazagon Dock Share – Essentials And Financials
The company has an operating revenue of Rs. 7,827.18 Cr. on a trailing 12-month basis and demonstrated a remarkable annual revenue growth of 39%. Moreover, its robust profitability ratios highlight its financial strength, with a commendable ROCE of 38.2% and ROE of 28.6%. The trailing twelve months PE ratio of the company stands at 29.9 which is slightly higher but this can be justified by the company’s high TTM EPS which is 53.19 Rs. per share, reflecting a significant 82.93% increase from the previous fiscal year.
A point I would like to bring to the attention of my reader is that sometimes PE can be high but if the EPS is also high then in the coming years, the PE ratio naturally decreases. This is because by formula, PE ratio is inversely proportional to EPS. Hence, higher the EPS, lower the PE Ratio and vice versa. Thus, the combination of a low PE ratio and a growing EPS indicates that the Company’s net profit is gradually rising.
The company is debt free and has a strong balance sheet enabling it to report stable earnings growth across business cycles. Additionally, a Dividend Yield of 0.59%, further enhancing the company’s appeal to stay in momentum.
During the March 2023 quarter, there was no change in the promoters’ holding, which remained steady at 84.83%. Similarly, the FII/FPI holding also remained unchanged at 3.29%. However, there were some notable developments in other categories of investors. Mutual funds increased their holdings from 0.22% to 0.26%, showcasing a slight growth in confidence during the period. Institutional investors also demonstrated a marginal increase in their holdings, rising from 3.55% to 3.59% in the March 2023 quarter.
These shifts in ownership signify the evolving dynamics of investor participation and interest in the company.
Evaluating Mazagon Dock Share Financial Statements
Profit & Loss | Income Statements
The chart clearly illustrates the remarkable growth of Mazagon Dock Shipbuilding Ltd. over the past five years. It is impressive to see how their revenue from sales has flourished, rising from 4,457 crores in March 2018 to an impressive 7,827 crores in March 2023. This signifies a generous increase and demonstrates the company’s ability to generate substantial sales.
Looking at the compounded sales growth, we observe a consistent upward trend. Over the last five years, the compounded sales growth stood at 12%, which is a solid achievement. Furthermore, in the last three years, it increased even further to 17%, reflecting the company’s continued momentum. The most recent data indicates a phenomenal compounded sales growth of 37% in the trailing twelve months, showcasing the company’s exceptional performance.
Notably, Mazagon Dock Shipbuilding Ltd. has also witnessed growing operating profits during this five-year period. Starting from 157 crores in March 2018, the operating profits have soared to an impressive high of 799 crores in March 2023. This indicates a substantial increase in operating efficiency and financial success for the company. When considering the compound annual growth rate of operating profits over the last five years, it reaches an impressive figure of approximately 408.4%. This growth rate highlights the company’s ability to consistently improve its operational performance.
The net profit of Mazagon Dock Shipbuilding Ltd. has experienced significant leaps in just five years. It’s astonishing to note that in a single year, from March 2022 to March 2023, the net profit surged from 611 crores to an impressive 1,119 crores. This extraordinary growth represents an approximate percentage increase of 83.15% in just one year, which is truly remarkable.
EPS and Dividend Payout
Over the course of 5 years, the Earnings per Share (EPS) of Mazagon Dock Shipbuilding Ltd. initially experienced a significant decline in March 2018 but has since shown a consistent upward trend. Starting at 22.14 Rs per share in March 2018, the EPS has grown substantially to reach 55.48 Rs per share in March 2023. This substantial increase in EPS signifies the company’s ability to maintain consistent earnings.
Additionally, Mazagon Dock Shipbuilding Ltd. has consistently maintained a healthy dividend payout of 28.7%.
Overall, Mazagon Dock Shipbuilding Ltd.’s financial performance over the past five years has been exceptional. Their consistent revenue growth, increasing operating profits, and significant jumps in net profit reflect their ability to capitalize on opportunities and deliver outstanding results.
Cash Flows Statements
The cash flow statement of Mazagon Dock reveals a significant improvement in cash flows from operating activities, which represents the cash generated by the company’s core operations. In the fiscal year 2022, the cash flow from operating activities stood at a negative value of -163 crores.
However, Mazagon Dock has made remarkable progress, and this figure has now improved to a positive and growing value of 858 crores. The rate of growth between these two points is approximately 626.99%, highlighting the company’s ability to generate cash from its core activities.
Furthermore, the net cash flows of Mazagon Dock have also witnessed a tremendous rise compared to the previous fiscal. As of March 2023, the net cash flows have reached an impressive figure of 1,148 crores. This substantial increase reflects the overall positive cash flow position of the company and indicates its ability to generate significant cash inflows.
Comparison Between Income Statements And Cash Flows Statements.
As we are well aware that a greater Cash flows from operating activities than the net income are being preferred as it represents that the company is able to generate more cash than its profit which is good for a company. In March 2023, Mazagon Dock’s Cash flows from operating activities stood at 858 crores while its net profit or net income stood at 1,119 crores.
This situation raises some interesting observations. While Mazagon Dock has achieved a significant net profit, the cash flows from its core operations are comparatively lower. This could be due to various factors such as timing differences in cash receipts and payments, non-cash items impacting net profit, or the inclusion of other sources of cash not directly related to operations. It’s important to consider that net profit reflects accounting measures, while cash flows from operating activities provide a more tangible view of the cash generated by the company’s day-to-day operations.
In any case, it’s worth further exploration to understand the reasons behind the difference between net profit and cash flows from operating activities. Evaluating the company’s cash management practices, its ability to convert profits into cash, and other factors influencing cash flow generation can provide a deeper understanding of the financial health and performance of Mazagon Dock.
mazagon dock share Analysis: Analyzing Key Performance Indicators
Profitability Ratios
Over the past 3 years, Mazagon Dock has consistently maintained a healthy Return on Capital Employed (ROCE) of 25.75%. This indicates the company’s ability to generate efficient returns on the capital invested in its operations, reflecting its effective utilization of resources.
Similarly, Mazagon Dock has also demonstrated a strong Return on Equity (ROE) of 17.15% over the same period. This highlights the company’s ability to generate favorable returns for its shareholders based on their investments.
Key Metrics
The company’s Interest Coverage Ratio stands at a healthy 52.72, indicating its ability to comfortably meet interest obligations on its debt. This suggests that Mazagon Dock has a strong capacity to manage its interest expenses, providing financial stability and reducing the risk of default.
Mazagon Dock has an efficient Cash Conversion Cycle (CCC) of -353.64 days. A negative CCC implies that the company is able to convert its resources, such as inventory and receivables, into cash more swiftly, resulting in a shorter operating cycle. This efficiency is beneficial as it helps improve the company’s cash flow management and liquidity position.
Furthermore, Mazagon Dock boasts a high promoter holding of 84.83%. This indicates that a significant percentage of the company’s shares is held by its promoters, demonstrating their confidence and long-term commitment to the company’s growth and success.
Overall, these key financial indicators reflect Mazagon Dock’s strong performance, prudent financial management, and commitment to delivering value to its shareholders and stakeholders.
Highlighting Some Important Aspects | Limitations Of Mazagon Dock
Mazagon Dock has contingent liabilities amounting to a significant figure of 53,252.97 crores. Contingent liabilities represent potential obligations or claims against the company that may arise in the future, depending on the occurrence of certain events or outcomes. These liabilities are not yet confirmed or recognized as actual liabilities but have the potential to impact the company’s financial position if they materialize.
The net cash flow of Mazagon Dock has been showing a decline, indicating that the company is currently facing challenges in generating positive net cash inflows.
Mazagon Dock’s earnings include an additional income of Rs. 713 crores, which comes from sources outside of its primary operations. This supplementary income enhances the company’s overall earnings and showcases its ability to generate revenue from diverse sources.
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A Closer Look At Company’s Annual /Quaterly Income Statement
Annual Revenue rose 38.6%, in the last year to Rs 8,514 Crores. Annual Net Profit rose 83.2% in the last year to Rs 1,119 Crores. Stock Price rose 531.9% and outperformed its sector by 468.8% in the past year. Debt to Equity Ratio is zero as the company is debt-free. Price to Earning Ratio is 30, higher than its sector PE ratio of 29.7.
Quarterly Revenue rose 48.9% YoY to Rs 2,289.8 Crores. Quarterly Net profit rose 105.1% YoY to Rs 326.2 Crores.
MAZAGON DOCK earnings for the last quarter are 13.19 INR whereas the estimation was 13.20 INR which accounts for -0.04% surprise. Company revenue for the same period amounts to 19.39B INR despite the estimated figure of 18.57B INR.
BOTTOM LINE
In conclusion, Mazagon Dock share has shown a remarkable growth trajectory with increasing revenues, operating profits, and net profits over the past five years. The company’s compounded sales growth and compound annual growth rate of operating profits highlight its consistent performance. Additionally, Mazagon Dock’s healthy ROCE, ROE, interest coverage ratio, and cash conversion cycle signify its financial stability and operational efficiency. However, it is important to consider contingent liabilities and the declining net cash flow as areas of concern. Overall, Mazagon Dock’s performance reflects its ability to generate value for shareholders and establish itself as a strong player in the market.
That’s all for today’s post. Hope you get some valuable insight from here.
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Disclaimer
The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.
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