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Mazagon Dock Secures ₹1,486 Crore Subsea Pipeline Contract

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Synopsis:

Mazagon Dock Shipbuilders secured a ₹1,486 crore contract from ONGC for a subsea pipeline replacement project. The EPC reimbursable project is expected to be completed by February 2026, adding to MDL's growing order book of ₹36,839 crore.

Mazagon Dock Shipbuilders Ltd (MDL), a state-owned defence and shipbuilding company, has been awarded a significant contract by Oil & Natural Gas Corporation Ltd (ONGC) for a subsea pipeline replacement project. The contract, valued at ₹1,486.4 crore, including 12% GST, involves work on the Pipeline Replacement Project 8 Group A (PRP 8 Group A) on an Engineering, Procurement, and Construction (EPC) reimbursable basis.

MAZAGON DOCK SHIPBUIL LTD

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Updated - 10 October 2024
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Project completion set for 2026

The project is scheduled for completion by February 28, 2026, further strengthening Mazagon Dock’s foothold in the engineering and shipbuilding sectors. This contract is a notable collaboration between two state-run entities, marking a continued push toward self-reliance in crucial sectors like oil and gas infrastructure.

Mazagon Dock’s stock exchange filing confirmed that the contract value includes all taxes and duties, further highlighting its role in India’s growing domestic industrial projects. The award on an EPC reimbursable basis means Mazagon Dock will be compensated for all expenses incurred during the project's execution, adding a significant revenue stream to the company over the next two years.

Strong financial performance drives growth

Mazagon Dock's first-quarter financials for FY25 reflect its operational strength, showing an 8.5% increase in revenue to ₹2,357 crore compared to the same period last year. Notably, its EBITDA nearly quadrupled year-on-year, rising from ₹171 crore to ₹642.5 crore, resulting in an EBITDA margin expansion to 27.3% from 7.9% the previous year.

The company achieved this by significantly reducing material costs, which fell from ₹1,433 crore to ₹1,106 crore, and cutting procurement costs of base and depot spares by more than half. These improvements boosted overall profitability, showcasing Mazagon Dock’s efficient cost management.

Robust order book

As of June 2024, Mazagon Dock holds an impressive order book valued at ₹36,839 crore, further solidifying its position as one of India’s premier shipbuilders and engineering contractors. The latest contract from ONGC will only add to this growing portfolio, enhancing the company’s long-term growth prospects in the highly competitive sector.

Mazagon Dock’s latest deal with ONGC underscores its ability to secure large-scale, high-value contracts, contributing to India’s energy infrastructure. With a substantial order book and solid financial performance, Mazagon Dock is well-positioned for sustained growth.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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