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Mazagon Dock shares slip 6.5% as government opens OFS to sell 4.83% stake at discounted price

Stocks
2 min Read Apr 4, 2025
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Shares of Mazagon Dock Shipbuilders Limited, one of India's leading defence PSUs, dropped by 6.5% during early trading on April 4, 2025. 

The dip follows the government's announcement to sell up to a 4.83% stake in the company via the Offer for Sale (OFS) route, priced at a floor of ₹2,525 per share—7.76% lower than the previous close of ₹2,737.55 on the National Stock Exchange (NSE).

The OFS will open for institutional investors on April 4, 2025, while retail investors can bid on April 7, 2025. The stake sale includes 1.14 crore equity shares, with an additional greenshoe option to sell 80.67 lakh shares, potentially raising ₹5,000 crores for the government.

OFS impact on Mazagon Dock Shipbuilders's share price

When a government entity offloads its stake via OFS, it typically results in a decline in the company's share price. This is largely due to:

  • Increased supply in the market

  • Discounted pricing of shares

  • Investor perception around reduced government involvement

In the case of Mazagon Dock Shipbuilders, the steep discount on the floor price led to a quick sell-off, reflecting market concerns about short-term price adjustments.

This scenario often serves as a reminder to investors about the importance of understanding timing and market psychology in share market investment.

Mazagon Dock Shipbuilders's financials remain strong despite stock correction

Despite the sharp fall in share price, Mazagon Dock Shipbuilders reported strong financial performance in Q3 FY25:

  • Net profit rose by 28.8% to ₹807 crores

  • Revenue from operations grew by 33% to ₹3,144 crores

  • Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) went up by 51.5% to ₹817 crores, with the margin rising by 317 basis points to 26%

The company also declared its highest-ever interim dividend of ₹467.72 crores (₹23.19 per share).

These figures underscore the firm's steady fundamentals and could appeal to long-term investors considering systematic investment plans (SIP) or lumpsum entries into defence-related stocks.

Strong order book and long-term prospects

As of Q2 FY25, Mazagon Dock Shipbuilders' order book stood at ₹39,800 crores. The company has a pipeline of high-value defence projects, including:

  • P75-I submarines

  • P17A stealth frigates

  • Next-generation destroyers

  • The P17 Bravo project

Additionally, a ₹19,900 crores contract was secured to construct an air-independent propulsion plug, aiming to enhance the endurance of conventional submarines.

For investors with long-term investment prospects, the stock remains a potential candidate for share market investment, especially with India's growing focus on indigenous defence manufacturing.

Mazagon Dock Shipbuilders share price trend

As of 11:39 AM on April 4, 2025, the shares of Mazagon Dock Shipbuilders Limited are down by 6.60%, at ₹2,556.90 per share on the NSE.

Shares of Mazagon Dock Shipbuilders have rallied 150% in the past 12 months and over 34% in the past six months. In the past 30 days, the stock has gained over 26%.