Central government plans to divest 4.83% of its stake in Mazagon Dock

The central government plans to divest up to a 4.83% stake in Mazagon Dock Shipbuilders Ltd, a state-run defence giant, through an offer for sale (OFS), the company announced in an exchange filing.

The government will offload a base stake of 2.83%—approximately 5.71 million shares—with an option to sell an additional 2% (about 4.03 million shares) under a green shoe provision. The OFS opens for non-retail investors on April 4, 2025, and for retail investors on April 7, with a floor price of ₹2,525 per share, a discount to the stock’s last close.

Mazagon Dock, headquartered in Mumbai, is a cornerstone of India’s defence sector, renowned as the “Ship Builder to the Nation.” Operating under the Ministry of Defence, it constructs warships like destroyers, frigates, and corvettes, and is the only Indian shipyard building conventional submarines, including the Scorpene-class for the Indian Navy. It also produces commercial vessels—cargo ships, tugs, and dredgers—and offers repair services. Since 1960, the Navratna company has delivered over 800 vessels, including 25 warships and 3 submarines, with a current order book exceeding ₹54,000 crore.

The government currently holds an 84.83% stake in Mazagon Dock, with the public owning 15.17%. This sale, potentially reducing its stake to 80%, aligns with multiple objectives. First, it supports India’s disinvestment goals, aiming to raise funds for fiscal needs. Second, it moves toward SEBI’s 25% minimum public shareholding requirement, though further sales may be needed. Third, the timing leverages Mazagon Dock’s stellar stock performance—up over 3,000% since its 2020 IPO—unlocking value at a still-attractive price.

The sale reflects India’s broader policy of reducing stakes in public sector firms while retaining control over strategic assets like defence. Mazagon Dock’s growth, driven by naval modernisation and export potential, may also benefit from increased private investment in the future.