Mazagon Dock Q1 Results: Net profit drops 35% YoY to ₹452 crore but improves sequentially; revenue soars 11.4% | Stock Market News

Mazagon Dock Q1 Results: Net profit drops 35% YoY to  ₹452 crore but improves sequentially; revenue soars 11.4% | Stock Market News

Source: Live Mint

Mazagon Dock Shipbuilders, a leading defence public-sector shipyard under the Ministry of Defence (MoD), announced its financial performance for the June-ended quarter (Q1FY26) today, July 28, post market hours.

The defence major reported a consolidated net profit of 452 crore in Q1FY26, down 35% from 696 crore in the same period last year but higher than the preceding March quarter’s net profit of 325 crore.

The net profit was also the weakest since the September 2023 quarter, having peaked at 807 crore in Q3 FY25. At the top level, its revenue from operations stood at 2,625 crore in Q1FY26, an 11.4% increase compared to 2,357 crore in Q1FY25, but 26% lower than the 3,174 crore reported in Q4FY25.

At the operating level, the company posted an EBITDA of 301 crore, down from 642 crore in the same quarter last year, marking a 53.11% year-on-year decline. The EBITDA margin also contracted sharply to 11.46% in Q1FY26, compared to 27.23% in Q1FY25.

The employee benefit expenses, and sub-contracting expenses came in lower compared to the March quarter but remained higher on a year-on-year basis. The company’s employee costs stood at 249 crore in Q1, 10% higher YoY, while sub-contracting expenses were 193 crore, up from 176 crore in the same period last year.

Analyst flags potential valuation correction if margins fail to recover

Mr. Harshal Dasani, Business Head, INVasset PMS, said “Mazagon Dock Shipbuilders reported a mixed bag for Q1FY26. While revenues grew 11.4% YoY to 2,625.6 crore, net profit dropped 36% YoY to 420 crore, hit by a sharp contraction in margins. EBITDA halved to 302 crore, down from 642 crore in the same quarter last year, and EBITDA margin slumped to 11.49% from 27.25%, indicating significant cost or execution-related headwinds.”

Harshal highlighted that topline growth reflects steady momentum in defence shipbuilding deliveries, particularly from frigates and submarines under execution, but the margin pressure indicates a less favourable order mix and rising cost burdens. He pointed out that provisions surged to over 540 crore from just 3 lakh last year, significantly weighing on profitability. Additionally, employee expenses increased 10% and procurement costs nearly doubled, further reducing operational efficiency.

Despite the margin weakness, Harshal emphasized that Mazagon Dock remains a strategic player in India’s defence indigenisation programme. He noted that the company’s associate, Goa Shipyard, contributed 32.9 crore to the bottom line, partially offsetting the earnings decline.

With the stock having rallied sharply in FY25, he believes these results could trigger a valuation reset unless margins recover in the coming quarters. He added that management’s guidance on provisioning levels and execution timelines will be critical for future performance.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.



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