Shares of Mazagon Dock Shipbuilders Ltd (MDL) experienced a notable decline on Tuesday, tumbling 13% from their intraday high after the defence public sector undertaking (PSU) announced a substantial 52% reduction in its net profit for the September quarter (Q2 FY27). The company's net profit plummeted to Rs 340.20 crore, a sharp decrease from Rs 715.37 crore reported in the same quarter last year.
The reported profit figures fell considerably short of the consensus estimate, which had projected a net profit of Rs 999 crore for the quarter. This unexpected downturn in earnings led to a significant market reaction, with MDL's scrip hitting a day's low of Rs 1,691.10 apiece after earlier reaching Rs 1,935.
Revenue Also Declines Amidst Challenging Quarter
In addition to the profit slump, Mazagon Dock also saw a decrease in its quarterly revenue. The company's revenue for Q2 FY27 declined by 23.93% year-on-year, coming in at Rs 2,228.08 crore. This is compared to Rs 2,929.04 crore recorded in the corresponding quarter of the previous fiscal year, indicating broader operational challenges during the period.
Interim Dividend Declared, Credit Facilities Approved
Despite the challenging quarterly results, the board of directors at Mazagon Dock declared an interim dividend of Rs 5 per equity share. This move aims to provide some return to shareholders amidst the profit contraction.
In a separate development, the PSU's board also granted approval for availing additional credit facilities totaling Rs 1,250 crore from SBI, Mumbai. These facilities are intended for issuing Standby Letters of Credit (SBLC) in favor of SBI, Sri Lanka, on behalf of its subsidiary, Colombo Dockyard PLC (CDPLC).
CDPLC requires furnishing bank guarantees to its clients for advance payments received on shipbuilding contracts. Due to limited internal resources relative to its order book, CDPLC had requested MDL, its holding company, to provide the necessary support to the bank issuing these guarantees. The newly approved SBLC facility will enable the bank in Colombo to issue these crucial bank guarantees as required by CDPLC's operations.