Mazagon Dock Shipbuilders: Confident of Achieving 15% EBITDA Margin in FY26

Mazagon Dock Shipbuilders Ltd., a defence PSU, is targeting EBITDA margins of 15% in FY26, said Director (Shipbuilding) Biju George in an interview with NDTV Profit. The company expects a stronger performance in the second half of FY26, driven by its healthy order book and improvement in performance.

EBITDA Margin Target

The defence PSU’s EBITDA margin contracted to 11.46% in Q1FY26, compared to 27.23% in the year-ago period. However, the company is confident of achieving its target of 15% EBITDA margin in FY26, said George.

‘With the present data available and the way it is panning out, a fair figure would be around 15% we would be able to sustain. The current order book is around Rs 30,000 crore, which we intend to liquidate in the coming four years by 2029,’ he said.

Order Book and Performance

The company reported a 35% year-on-year decline in consolidated net profit at Rs 452 crore in Q1FY26 from Rs 696 crore in Q1FY25. The top executive attributed this to a ‘surprising’ quantum of provisions.

However, George confirmed that the provisioning issue is largely behind the company, with margins expected to normalise from the second quarter.

‘We have done a very conservative provisioning to ensure that no further provisioning would be required in the subsequent quarters. On a yearly basis, our revenue and profitability can be maintained and sustained at the levels it was anticipated,’ he explained.

Revenue Growth and Order Book

George projected a normalised revenue growth rate of 8-10% due to the long gestation period of shipbuilding projects. The company expects a stronger performance in the second half of the financial year, driven by the execution of key ONGC projects.

‘H2 of this financial year would look better as more revenues will trickle down from the ONGC projects,’ he said.

Upcoming Projects and Order Book

The state-owned shipbuilding company is also a strong contender for several high-value upcoming projects. The top executive highlighted the P-75I submarine orders, next-generation destroyers, and Project 17B frigates as major opportunities.

Despite global uncertainties, George downplayed concerns about execution, stating that most equipment is already secured, albeit at higher prices.

Debt and Equity Fundraising

Mazagon Dock Shipbuilders has no immediate plans for debt or equity fundraising. George highlighted that the company’s internal accruals and cash flows are sufficient to fund its capital expenditure, which is spread over three to four years due to the long gestation period of civil works and projects.

‘As of now, we’re not looking at equity fundraising. If growth accelerates significantly, we’ll reassess,’ he added.

Conclusion

Mazagon Dock Shipbuilders Ltd. is confident of achieving its EBITDA margin target of 15% in FY26, driven by its healthy order book and improvement in performance. The company expects a stronger performance in the second half of the financial year, driven by the execution of key ONGC projects and upcoming high-value projects.