Mazagon Dock Shipbuilders IPO: All You Need To Know
India’s second Scorpene-class submarine ‘Khanderi’ launched at Mazagon Dock Shipbuilders Limited (MDL), in Mumbai on Thursday. (Photo: PTI)

Mazagon Dock Shipbuilders IPO: All You Need To Know

The Indian government will sell its stake in Mazagon Dock Shipbuilders Ltd. through an initial public offering, starting Tuesday, coinciding with its divestment drive in state-run entities.

The Miniratna status builder of warships, submarines and commercial vessels plans to raise Rs 444 crore through the maiden offer, the price band for which has been set at Rs 135-145 apiece, according to its red herring prospectus. The issue comprises an offer-for-sale of up to 3.06 crore shares by the shipyard’s promoter—the Government of India, acting through the Ministry of Defence.

  • Issue opens on: Sept. 29
  • Issue closes on: Oct. 1
  • Face value: Rs 10 apiece
  • Listing on: NSE, BSE
  • Minimum Bid: 103 shares (and in multiples of 103 shares thereafter)

The IPO—the sixth this month and the first by a government enterprise in 2020—values the company at Rs 2,925 crore at the upper end of the price band, according to BloombergQuint’s calculations. After the share sale, total promoter holding will fall to 84.83% from 100%, while the rest will be owned by the public.

The government has been paring its stake in defence enterprises—15% each in Hindustan Aeronautics Ltd. and Bharat Dynamics Ltd.—even as it aims to ramp up local manufacturing of such equipment. The central government, according to budget documents, aims to garner Rs 2.1 lakh crore through divestments in 2020-21.

While the company said the objective of the IPO is to achieve the benefits of listing equity shares on stock exchanges, it will not receive any proceeds from the offer.

Axis Capital Ltd., Yes Securities Ltd., Edelweiss Financial Services Ltd., IDFC Securities Ltd. and J.M. Financial Services are the book running lead managers to the issue.

Besides Mazagon Dock, UTI Asset Management Co. and Likhitha Infrastructure Ltd. will be going public on Sept. 29.

The Business

Incorporated in February 1934, Mazagon Dock is engaged in constructing and repairing warships and submarines for the Defence Ministry, besides manufacturing cargo ships, multipurpose support vessels, barges and border outposts, tugs, dredgers and water tankers, among others for commercial clients. It’s the only shipyard that builds destroyers and conventional submarines for Indian Navy.

Its shipbuilding division undertakes building and repairing naval ships, and submarine heavy engineering division includes building, repairing, and refitting of diesel electric submarines.

The company has a maximum shipbuilding and submarine capacity of 40,000 dead weight tonnage, and uses the facilities in Mumbai and Nhava. It’s currently executing orders for five Scorpene submarines—jointly developed by DCN of France and Navantia Spain. Its major customers are Indian Navy and Coast Guard.

Mazagon Dock’s current order book stands at Rs 54,074 crore—entirely from the Ministry of Defence. That, according to Vice Admiral Narayan Prasad, chairman and managing director at the shipyard, provides a revenue visibility for the next six-seven years. The company also expects the Indian government’s ‘Atmanirbhar Bharat’ plan to positively impact private and public shipyards as domestic manufacturing picks up.


Mazagon Dock’s revenue grew at an annualised rate of 9% through fiscals 2017-2020, while its operating and net profit fell 17% and 6%, respectively, during the period.


The company’s listed peers include Cochin Shipyard Ltd. and Garden Reach Shipbuilders Ltd.

Key Risks

  • Non-compliance in certain SEBI guidelines owing to the nature of the business
  • Fully regulated under the supervision of the Ministry of Defence
  • The company or its technical collaborators may engage in certain transaction in or with countries or person that are subject to the U.S. and other sanctions
  • Unforeseen environmental costs
  • Delay of projects and costs/time overrun

(Information sourced from the red herring prospectus and a report by Axis Capital)

Also read: Mazagon Dock Shipbuilders Bets Big On India’s Atmanirbhar Bharat Plan

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