Multibagger defence stock zoomed 560% in a year; time to buy, sell or hold?

Shares of Mazagon Dock Shipbuilders Ltd hit a record high in early deals amid a rally in the broader market today. The multibagger defence stock, which closed at Rs 259.7 on July 15, 2022 hit a record high of Rs 1776.40 on the BSE today, delivering 560% returns during the period. An amount of Rs 1 lakh invested in the shares of multibagger Mazagon Dock Shipbuilders a year ago would have turned into Rs 6.84 lakh today. In comparison, Sensex has risen 22.50 per cent during the period.

The stock zoomed 3.37% to an all-time high of Rs 1776.40 today. It opened higher at Rs 1743.05 against the previous close of Rs 1718.45 on BSE.  Market cap of the firm climbed to Rs 35,094 crore.  

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With today's rally, Mazagon Dock stock has risen 120% this year. In a year, the stock has delivered stellar returns of 560.54%. Total 0.67 lakh shares changed hands amounting to a turnover of Rs 11.80 crore on BSE. Mazagon Dock stock hit a 52-week low of Rs 261 on July 18, 2022.  

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In terms of technicals, the relative strength index (RSI) of Mazagon Dock stands at 78.7, signaling it's trading in the overbought territory. Mazagon Dock stock has a one-year beta of 1.5, indicating very high volatility during the period. Mazagon Dock shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.  

Antique Stock Broking has given a target of Rs 1,944 on the stock.

"The stock is still under-valued. Here are the reasons why: (1) Investors assume the Rs 430 bn P75(I) is a one-off project-with Mazagon Dock's best case of winning 4/6 orders; on the contrary, we argue submarine work is recurring. Add three units of the Scorpene class, followed by 12 units of the P76-and the TAM is over Rs 1.3 trn; (2) Moving to non-submarine work, there is Rs 345 bn order backlog that can support Rs 100 bn plus annual execution, which again has a recurring argument with a TAM of over Rs 1.3 trn. Thereby, for projections made using

Abhijeet from Tips2Trades said, "Mazagon Dock stock price is overbought on the Daily charts with strong resistance at Rs 1773. Investors should book profits at current levels as a close below support of Rs 1591 could lead to Rs 1160 level in the near term."

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock had a fantastic rally in the past 1-2 months from the levels of Rs 740 to race toward the peak zone of Rs 1770 levels where it has witnessed some resistance barrier and consolidating for the time being. The near-term support would be at around Rs 1570-1590 zone and for further fresh upside move, a decisive breach above Rs 1770 levels is needed."

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In the fourth quarter of the previous fiscal, net profit more than doubled to Rs 326 crore   against Rs 159 crore in the corresponding quarter of the last year. Other income rose to Rs 211 crore in Q4 against Rs 129 crore year on year. Revenue climbed 49 percent to Rs 2,078 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) zoomed nearly three times to Rs 211 crore in Q4 against Rs 77 crore year on year. EBITDA margins doubled to 10.1 percent versus 5.5 percent in the corresponding quarter of last year.

Mazagon Dock Shipbuilders Ltd (MDS) is a shipbuilding and offshore fabrication yard. The company's major activities include shipbuilding, ship repairs and fabrication of offshore structures. It provides warships, merchant ships, submarines, support vessels, offshore platforms, passenger cum cargo vessels, trawlers, main and helidecks and barges.

 

 

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