Shares of Mazagon Dock Shipbuilders are down 12% in the last two sessions amid brokerage reports that the stock is overvalued and is likley to see correction going ahead. The multibagger stock, which closed at Rs 4976.40 on August 16 fell to an intraday low of Rs 4359.75 in the current session, losing 12.39% during the period. Mazagon Dock's market cap stood at Rs 87958 crore. The stock slipped 8% on an intraday basis today.
Total 1.66 lakh shares of the firm changed hands amounting to a turnover of Rs 80.78 crore. Market cap of Mazagon Dock stood at Rs 88,137 crore on BSE.
Mazagon Dock shares have a one-year beta of 1.4, indicating very high volatility during the period.
In terms of technicals, the relative strength index (RSI) of Mazagon Dock stands at 45.5, signaling it's trading neither in the overbought nor in the oversold zone.
Mazagon Dock shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day and higher than the 100 day, 150 day and 200 day moving averages.
Brokerage Nirmal Bang Institutional Equities is bearish on the stock. It assigned a 'Sell' recommendation on the Mazagon Dock, citing expensive valuations. The stock is currently trading at 30.4 times the estimated FY26 earnings per share, which is massively above the 3-year average PE of 11.1 times.
"We had downgraded the defence sector to 'Sell' earlier this month because of extremely steep valuations relative to sector fundamentals. We maintain 'Sell' on Mazagon Dock with a target price of Rs 4,468," Nirmal Bang said.
Riyank Arora, Technical Analyst at Mehta Equities recommends sell on rise strategy on the defence sector stock.
"Mazagon Dock currently shows a bearish outlook with immediate support at Rs 4540 and resistance at Rs 5155. The stock is facing selling pressure, and a 'sell on rise' strategy is recommended. Traders should look to exit positions near the Rs 5100-5200 range as the stock approaches resistance levels. A re-entry is advised only around Rs 4500, where strong support is expected. Monitoring price action and volume will be crucial to confirm these levels," said Arora.
Jigar S Patel, technical research analyst, Anand Rathi Shares and Stock Brokers said, "Support will be at Rs 4,850 and resistance at Rs 5,155. A decisive close above the Rs 5,155 level may trigger a further upside to 5,300. The expected trading range will be between Rs 4,800 and Rs 5,300 in the short term."
ICICI Securities believes the stock is overvalued at the current market price. The brokerage also sees risks to ordering/execution timelines. It has maintained sell call on the multibagger stock post Q1 earnings.
It has revised its price target to Rs 1165 (from earlier Rs 900).
"EBITDA margin could taper off to 12-15%. It is noteworthy that we are still expecting higher margin than FY17-FY23 phase due to cost efficiencies and internal competencies that the company has built over a period of time. Considering the elevated near-term margins, we have raised our EPS estimates by 51%/73% for FY25/FY26. Despite factoring in the potential orders of P75 (three additional submarines), P75I and next-gen destroyers, and margins at an elevated level in the near term, we believe the stock is overvalued at the CMP. In our view, while EPS is likely to be range bound at Rs 95-120/share from FY28-32E, there are risks to ordering/execution timelines. We maintain SELL on MDL with a revised target price of Rs 1,165 (earlier Rs 900/share), as per DCF methodology,” said the brokerage.