The stock is in a bull run for the last month due to multiple triggers. It has risen 37% during this period.
Mazagon Dock Shipbuilders is one of India’s leading shipbuilding yards, having evolved from a single-unit, small ship repair company to a multi-unit and multi-product company. It is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy.
Technically, analysts expect the stock to continue its winning run in the near term.
“Till the time the price is above 200-DMA, we can always expect some bullishness in the stock. The magnitude of the momentum totally depends upon the price movement,” said Manas Budhiraja, co-founder, TradingMonks.
We expect the bullishness to continue above the levels of 1,000 which is a good psychological figure for buyers, Budhiraja added.
Mazagon Dock has a strong order backlog of Rs 38,754 crore as of March 2023 (4.95x FY23 revenues), led by three major contracts – Project-17A frigates, Project-15B destroyers and Project-75 submarines.HDFC Securities said the Indian defence sector is going through a major transformational phase as the government looks committed to reducing imports and increasing the indigenisation of various key defence platforms.
Mazagon Dock could be one such beneficiary of the government’s local push and the upcoming bids from the defence ministry could improve the order book and revenue visibility of the company.
“The company has the ability to sustain the growth in a competitive environment while maintaining leadership in warship building and retaining its largely debt-free status with comfortable liquidity. Growth momentum is expected to continue in the coming quarters,” the brokerage said while initiating coverage on the stock.
Compared to its two PSU peers, it scores better in terms of PAT margins and RoE, while its valuation is lower, it added.
HDFC Securities said investors can buy in the Rs 1009-1050 band and add more on dips to Rs 923-941 band (14x FY25E EPS) for a base case target price of Rs 1,131 (17x FY25E EPS).
In a bull case scenario, the fair value of the stock could further rise to Rs 1,231 (18.5x FY25E EPS) over the next two to three quarters.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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