Mazagon Dock share breaks 20-DMA, momentum indicator RSI signals fresh buy

Systematix Institutional Equities on Thursday highlighted that Mazagon Dock Shipbuilders Ltd has completed a bullish AB=CD harmonic reversal pattern, with the potential reversal zone around Rs 2,607, signaling a solid base for the next upward leg. The stock on Wednesday closed above the highs of the previous three sessions, reflecting strong momentum. On Thursday, it was trading 1.44 per cent higher at Rs 2,795. 

The stock has consistently respected the 200-DMA at Rs 2,686 and the critical 61.8 per cent Fibonacci retracement level at Rs 2,628, underlining the importance of the support zone. After a prolonged consolidation near the 200-DMA, Mazagon Dock has now broken above the 20-DMA, marking a decisive shift in the short-term trend, Systematix said. It noted that the RSI-14 momentum indicator has moved above 50 with a visible positive divergence, giving a fresh buy signal. This rally is further supported by above-average trading volumes, suggesting strong buying interest at lower levels.

“Taken together, these signals build a robust bullish case: as long as Mazagon Dock sustains above Rs 2,640, the stock is well-positioned to target Rs 2,850, with an extended upside potential towards Rs 2,950 in the near term,” the brokerage said.

Fundamental view
The Mazagon Dock stock had previously lagged following the defence company’s muted Q4 and Q1 earnings and delays in order finalization.

Antique Stock Broking said sentiment is expected to improve as progress is made on the P-75I submarine order. “We remain positive on the stock given its large order pipeline, unmatched position in submarine building, and the government’s focus on developing the shipbuilding sector,” the brokerage added. It maintained its Buy rating with a target price of Rs 3,858, valuing Mazagon Dock at 44 times H1FY28 core earnings.

Mazagon Dock Shipbuilders has commenced contractual negotiations with the Indian Navy for the submarine project P-75(I), which involves the indigenous construction of six submarines. 

Antique said this is a positive development and should allay investor concerns with respect to delay in order finalization. Given the
government's focus on reducing ordering timelines, the domestic brokerage expects this order to be placed in FY26, which should provide good revenue visibility in the medium term. 

"The order pipeline remains robust as we expect the company to receive an order for three additional submarines of Kalvari class (on a
negotiated basis)," it said.