Multibagger Mazagon Dock Shipbuilders shares snap two-day fall, jump 7% today; here's what tech charts indicate

Shares of Mazagon Dock Shipbuilders rose sharply in Tuesday's trade, pausing their two-day losing run. The stock surged 7.03 per cent to hit a day high of Rs 2,219.55 over its previous close of Rs 2,073.70. Today's sharp up move in the share price came after the company said it has signed a Letter of Intent (LOI) with a European client for construction of "6 firm and 4 optional units of 7,500 DWT multi-purpose hybrid power vessels." The prices would be firmed up at the time of signing of contract, it added.

The multibagger stock has surged around 217 per cent in last six months and 177 per cent on a year-to-date (YTD) basis. On a broader duration, it has zoomed nearly 250 per cent in a year and 1,200 per cent in the past five years.

Mazagon Dock's three-year initial public offering (IPO) lock-in period ended on October 9. With the end of this lock-in period, 4 crore shares (around 20 per cent of outstanding shares) of the company went eligible for trading purposes. The stock has seen a stellar run when compared to its IPO price in 2020.

As of the June quarter, the government holds 84.83 per cent stake in the shipbuilding company.

The counter was last seen trading higher than the 5-day, 10-, 30-, 50-, 100-, 150- and 200-day simple moving averages (SMAs) but lower than the 20-day SMA. The counter's 14-day relative strength index (RSI) came at 55.61. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 36.61 against a price-to-book (P/B) value of 11.18.

The scrip has an analyst target price of Rs 1,500, Trendlyne data showed, suggesting a potential downside of 31 per cent in a year. It has a one-year beta of 1.9, indicating high volatility on the counter.

DRS Finvest founder Ravi Singh said, "The share price is bullish on daily and weekly charts and technical indicators are suggesting an uptrend inherent in the counter. The stock may touch the levels of Rs 2,300 in near term."

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "The stock price has been in a secular uptrend, hovering above 21-DEMA (Double Exponential Moving Average) on the daily charts in the cycle of higher highs – higher lows. Currently, the counter is in a cool-off/consolidation phase but seems poised to continue its upward march in the near period. As far as levels are concerned, the immediate support lies around the bullish gap of Rs 2,100 odd zone, followed by a strong support of Rs 2,060-2,020. On the flip side, a decisive breakthrough above Rs 2,300 could trigger momentum in the counter to enter into uncharted territory."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "At the current juncture, the stock is trading above all key daily exponential averages. So, the bias is bullish for the coming few weeks. As we advance, credible support is expected near Rs 2,000 and stiff resistance is seen near Rs 2,475."

On the flip side, an analyst suggested that the counter looked 'bearish'. AR Ramachandran from Tips2trades said, "The stock price looks bearish on the daily charts with strong resistance at Rs 2,300. A daily close below support of Rs 2,069 could lead to target of Rs 1,900 in the near term." 

On the earnings front, Mazagon Dock reported a 40 per cent year-on-year (YoY) rise in its consolidated net profit, at Rs 314 crore, in the June quarter (Q2 FY24) from Rs 224.8 crore in the corresponding quarter of the last fiscal. Revenue from operations slipped 2.6 per cent YoY to Rs 2,172.8 crore in Q2 FY24 from Rs 2,230 crore during the same period a year ago.

Meanwhile, Indian equity benchmarks traded higher in afternoon deals, led by gains in banks, financials, automobile and realty stocks.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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