Rs 145 to Rs 1,280: This stock zoomed over 780% from its IPO price; should you buy?
Mazagon Dock Shipbuilders Limited is one of the leading shipbuilding yards in India. It was incorporated as a Private Limited Company in 1934.
- Jul 5, 2023,
- Updated Jul 5, 2023 8:08 AM IST
Shares of Mazagon Dock Shipbuilders have created massive wealth for its shareholders in a very short span of time. The Rs 444-crore IPO of Mazagon Dock received stellar response from investors back in October 2020. The issue price was Rs 145 per share. The multibagger is up over 780% from its IPO price and hit its 52-week high of Rs 1,341 on July 3, 2023.
The company's market cap also crossed the Rs 25,000 crore mark on NSE and BSE. It also became the first shipbuilding company to achieve this mark.
About the company
Mazagon Dock Shipbuilders Limited is one of the leading shipbuilding yards in India. It was incorporated as a Private Limited Company in 1934.
After its takeover by the Government in 1960, Mazagon Dock grew rapidly to become the premier war-shipbuilding yard in India, producing warships for the Navy and offshore structures for the Bombay High.
The company's current portfolio of designs spans a range of products for both domestic and overseas clients. Since 1960, MDL has built total 801 vessels including 27 warships, from advanced destroyers to missile boats and 7 submarines. It had also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessel, water tankers, tugs, dredgers, fishing trawlers, barges & border outposts for various customers in India as well as abroad.
What's driving the rally?
The stock hogged the limelight after the firm bagged an order worth Rs 2,724 crore from the Indian Navy. "Mazagon Dock Shipbuilders Limited (MDL) signed a Contract with Indian Navy for Medium Refit cum Life Certification (MRLC) of second Shishumar class submarine INS SHANKUSH," the company said in a press release.
What's next?
According to HDFC Securities, Indian Navy’s major projects in the pipeline are next generation destroyers, next generation frigates, conventional submarines and next generation corvettes. Mazagon is India’s only shipyard to engage in building destroyers and conventional submarines for the Indian Navy. The upcoming bids from the Defence ministry could improve the order book and revenue visibility.
"Compared to its two PSU peers, it scores better in terms of PAT margins and RoE, while its valuation is lower. Investors can buy in the Rs 1009-1050 band and add more on dips to Rs. 923-941 band. Base case fair value of the stock is Rs 1131 and the bull case fair value of the stock is Rs 1231 over the next two to three quarters," it added.
Antique Stock Broking is positive on this PSU stock, as it believes Mazagon Dock is on the path to hitting Rs 10,000 crore in annual revenues by FY25, noting that the firm is firing only 50 per cent of its capacity utilisation or functioning through less than 10 out of 21 yards. The key drivers for Mazagon Dock stock would be progress on Destroyer P15B and Frigates P17A, which contribute nearly 85 per cent of the company's revenue.
"Even without the new orders, we forecast 13 per cent CAGR for revenue over FY23-FY25E. Margins are favourable in FY23, which could be headed for a decline in FY24. We retain BUY rating with a target price of Rs 1,073 (18 times FY25 EPS). Risks: delay in execution schedule or lower margin work done," it said.
"Mazagaon Dock, a leading player in the shipbuilding industry, has witnessed a spectacular rally with the stock gaining almost 62% YTD, to trade at record levels (CMP – Rs.1289). The company has delivered a good profit growth of 19.5% CAGR over the past 5 years, clocking 37% growth in revenues for full year FY23. Further, net profit for full year FY23 grew by over 80% to Rs 1,073 crore, compared with Rs 586 crore in FY22. Investor confidence remains high in the stock but at current levels, booking part profits is also recommended," said Aamar Deo Singh, Head Advisory, Angel One.
Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position.
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Shares of Mazagon Dock Shipbuilders have created massive wealth for its shareholders in a very short span of time. The Rs 444-crore IPO of Mazagon Dock received stellar response from investors back in October 2020. The issue price was Rs 145 per share. The multibagger is up over 780% from its IPO price and hit its 52-week high of Rs 1,341 on July 3, 2023.
The company's market cap also crossed the Rs 25,000 crore mark on NSE and BSE. It also became the first shipbuilding company to achieve this mark.
About the company
Mazagon Dock Shipbuilders Limited is one of the leading shipbuilding yards in India. It was incorporated as a Private Limited Company in 1934.
After its takeover by the Government in 1960, Mazagon Dock grew rapidly to become the premier war-shipbuilding yard in India, producing warships for the Navy and offshore structures for the Bombay High.
The company's current portfolio of designs spans a range of products for both domestic and overseas clients. Since 1960, MDL has built total 801 vessels including 27 warships, from advanced destroyers to missile boats and 7 submarines. It had also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessel, water tankers, tugs, dredgers, fishing trawlers, barges & border outposts for various customers in India as well as abroad.
What's driving the rally?
The stock hogged the limelight after the firm bagged an order worth Rs 2,724 crore from the Indian Navy. "Mazagon Dock Shipbuilders Limited (MDL) signed a Contract with Indian Navy for Medium Refit cum Life Certification (MRLC) of second Shishumar class submarine INS SHANKUSH," the company said in a press release.
What's next?
According to HDFC Securities, Indian Navy’s major projects in the pipeline are next generation destroyers, next generation frigates, conventional submarines and next generation corvettes. Mazagon is India’s only shipyard to engage in building destroyers and conventional submarines for the Indian Navy. The upcoming bids from the Defence ministry could improve the order book and revenue visibility.
"Compared to its two PSU peers, it scores better in terms of PAT margins and RoE, while its valuation is lower. Investors can buy in the Rs 1009-1050 band and add more on dips to Rs. 923-941 band. Base case fair value of the stock is Rs 1131 and the bull case fair value of the stock is Rs 1231 over the next two to three quarters," it added.
Antique Stock Broking is positive on this PSU stock, as it believes Mazagon Dock is on the path to hitting Rs 10,000 crore in annual revenues by FY25, noting that the firm is firing only 50 per cent of its capacity utilisation or functioning through less than 10 out of 21 yards. The key drivers for Mazagon Dock stock would be progress on Destroyer P15B and Frigates P17A, which contribute nearly 85 per cent of the company's revenue.
"Even without the new orders, we forecast 13 per cent CAGR for revenue over FY23-FY25E. Margins are favourable in FY23, which could be headed for a decline in FY24. We retain BUY rating with a target price of Rs 1,073 (18 times FY25 EPS). Risks: delay in execution schedule or lower margin work done," it said.
"Mazagaon Dock, a leading player in the shipbuilding industry, has witnessed a spectacular rally with the stock gaining almost 62% YTD, to trade at record levels (CMP – Rs.1289). The company has delivered a good profit growth of 19.5% CAGR over the past 5 years, clocking 37% growth in revenues for full year FY23. Further, net profit for full year FY23 grew by over 80% to Rs 1,073 crore, compared with Rs 586 crore in FY22. Investor confidence remains high in the stock but at current levels, booking part profits is also recommended," said Aamar Deo Singh, Head Advisory, Angel One.
Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position.
Also read: ICICI Bank, Bajaj Auto and Raymond: How should you trade these buzzing stocks?
Also read: Suzlon Energy, IOC, Adani Green Energy shares in news ahead of fundraising meetings