Shares of Garden Reach Shipbuilders hit their record high on Monday after the defence firm inked a Rs 170 crore contract with the Ministry of Defence, Bangladesh. Garden Reach Shipbuilders stock has risen 183% in the last three months and gained 301% in a year. The multibagger defence stock has zoomed 945% in two years. Shares of the warship building company saw the highest turnover of Rs 224 crore as 9.83 lakh shares changed hands on BSE today.
In terms of technicals, the relative strength index (RSI) of the stock stands at 74.7, signaling it's trading in the overbought zone. It also signals that there are more buyers than sellers for the stock in the current session.
The stock rose 10% to a high of Rs 2309.50 against the previous close of Rs 2099.55. Market cap of the defence firm rose to Rs 26,455 crore on BSE. The stock closed at Rs 224.25 on June 30, 2022. Garden Reach shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day and 100 day moving averages.
Garden Reach stock fell to a 52 week low of Rs 558.60 on July 4, 2023. It has a high beta of 1.1%, indicating high volatility in a year.
Despite multibagger returns, analysts we spoke to are bullish on the stock.
Jigar S Patel at Anand Rathi said, "Support will be at Rs 2175 and resistance at Rs 2300. A decisive close above the Rs 2300 level may trigger a further upside to Rs 2450. The expected trading range will be between Rs 2000 and Rs 2500 for a month."
Mandar Bhojane, Equity Research Analyst at Choice Broking said, “The defence stock is currently trading at Rs 2309, showcasing a notable 10% surge on July 1, 2024, reaching an all-time high. This upward momentum is supported by a consistent pattern of higher highs and higher lows on the daily chart, accompanied by robust trading volume. These patterns underscore a strong upward trajectory in the stock.
Riyank Arora Technical Analyst at Mehta Equities said, "The monthly RSI on GRSE surged and crossed the 88 mark, indicating overbought conditions for the stock. At the current level of Rs 2306.50, the stock appears overbought and is likely to experience profit-taking. It is advisable to book profits and wait for a pullback towards the Rs 2000 level for a fresh entry into the stock."
The Relative Strength Index (RSI) stands at 78.8 and is on an upward trend, signifying a significant surge in buying momentum. Both RSI and Stochastic RSI in the overbought region suggest that positional traders may consider holding their positions, implementing a trailing stop-loss.
The overall trend for GRSE is bullish, with confluence from various technical indicators reinforcing the optimistic outlook. Given these signals, there is potential for the stock to achieve a target price of Rs 2700 & Rs 2800 in the near term.
It is advisable to consider buying on dips, particularly around Rs 2000, capitalizing on potential retracements in the stock price. To prudently manage risk, implementing a stop-loss (SL) at Rs 1700 is recommended. This precautionary measure is crucial to safeguard investments in the event of an unexpected market reversal."
Garden Reach Shipbuilders & Engineers is a warship building company. The company is under the administrative control of the Ministry of Defence, primarily catering to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard.