Defence stock engaged in the construction, repair, and refurbishment of warships, Submarines and many more jumped up to 7 percent in the day’s trade upon receiving Navratna Status.
Price Action
With a market capitalization of Rs. 85,372 Crores, the shares of Mazagon Dock Shipbuilders Limited were trading at Rs. 4,240 per equity share, up 6.63 percent from its previous day’s close price of Rs. 3,976.55.
What Happened
Mazagon Dock Shipbuilders Limited has been granted “Navratna” status by the Department of Public Enterprises vide its letter dated 25″ June 2024. Following this it becomes the country’s 18th PSU to have been accorded this status.
How will it benefit
The benefits of having a Navratna Status for Public Sector Undertakings are that they can invest up to Rs. 1,000 Crores or 15 percent of their net worth in a single project without needing government approval.
Further, it has the liberty to invest up to 30 percent of its net worth within a year as long as it stays below Rs. 1,000 crores. Additionally, these companies can engage in joint ventures, form alliances, and establish subsidiaries overseas.
Eligibility Criteria to Become a Navratna Company
The Eligibility Criteria to become a Navratna company is, that it should already hold the Miniratna Category I status and be listed under Schedule A of CPSEs. It must have consistently received an outstanding rating under the Memorandum of Understanding System for at least three out of the last five years.
Additionally, the company needs to meet specific criteria across six key areas, including net profit to net worth, PBDIT to capital employed, gross margin as capital expenditure, manpower cost to cost of production or services, gross profit as turnover, and earnings per share.
About the company
Mazagon Dock Shipbuilders Limited is a Miniratna Public sector Undertaking which is one of India’s leading defense sector companies under the aegis of the Ministry of Defence, it is engaged in the construction, repair, and refurbishment of warships and submarines at its dedicated facilities in Mumbai and Nhava.
Mazagon Dock Shipbuilders Limited is India’s only shipyard to have built Destroyers, and conventional submarines for the Indian Navy & manufacture corvettes in India. Since 1960 It has delivered more than 802 vessels of which 28 warships from advanced destroyers to missile boats and 7 submarines.
Financials and Ratios
As of FY24, Mazagon Dock Shipbuilders Limited has reported a strong order book of Rs. 38,000 Crores and Net Profit Margins of 18.32 percent.
Its Revenue from operations grew by 49.32 percent from Rs. 2,078.59 Crores in Q4FY23 to Rs. 3,103.65 Crores in Q4FY24, accompanied by profits of Rs. 318 Crores to Rs. 654.33 Crores.
Written by: Bharath K.S
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