Rs 282 to Rs 737: This defence sector stock has more than doubled in six months

Shares of Mazagon Dock Shipbuilders have delivered over 100% returns in the last six months. The public sector undertaking stock (PSU) stock, which closed at Rs 282.95 on August 10, 2022, were trading at Rs 737 on BSE today, translating into returns of 161% during the period. An amount of Rs 1 lakh invested in Mazagon Dock Shipbuilders stock six months ago would have turned into Rs 2.60 lakh today. In comparison, Sensex has risen merely 3 per cent during the period.

The stock touched an intraday high of Rs 744.35 today, rising 3.93 per cent against the previous close of Rs 716.20 on BSE.

The PSU stock has gained after three days of consecutive fall. Shares of Mazagon Dock Shipbuilders are trading higher than the 100 day and 200 day moving averages but lower than 5 day, 20 day and 50 day moving averages.

In a year, the stock has gained 176 per cent and lost 6.87 per cent this year. Total 0.30 lakh shares of the firm changed hands amounting to a turnover of Rs 2.16 crore on BSE.

Market cap of the firm rose to Rs 14,865 crore. The stock hit a 52 week high of Rs 936.85 on December 5, 2022 and a 52-week low of Rs 224 on February 24, 2022.

Returns of Peers

The firm has outshined peers when it comes to returns to shareholders during the last six months. While Cochin Shipyard stock zoomed 41 per cent, Garden Reach Shipbuilders and Engineers shares climbed 82 per cent during the period. The rally in the stock can be attributed to strong earnings of the firm in the last two quarters.

Financial Performance

Mazagon Dock Shipbuilders reported a 64% jump in consolidated net profit to Rs 354.16 crore in Q3 against Rs 215.20 crore profit in the corresponding quarter of the previous fiscal. Sales rose 17% to Rs 1815 crore in the last quarter against Rs 1552.50 crore in the corresponding quarter of the previous fiscal. EBITDA rose 46.43% to Rs 295.73 crore in the December quarter against Rs 201.96 crore in the corresponding quarter of the previous fiscal.

In the second quarter of the current fiscal, the firm, reported a 58% rise in profit to Rs 213.90 crore against Rs 135.02 crore in Q2 of FY22.

Revenue from operations rose 8.42% to Rs 1,702.36 crore in Q2 compared to Rs 1,570.11 crore in the corresponding period of last fiscal.

On a yearly basis, sales rose 41.64% to Rs 5733.28 crore in the last fiscal against Rs 4047.82 crore in the fiscal ended March 2021. Net profit rose 18.87% to Rs 610.84 crore in fiscal ended March 2022 against Rs 513.86 crore for the fiscal ended March 2021.

Analysing Q2 show

ICICI Securities has maintained a sell call for Mazagon Dock Shipbuilders after Q3 earnings.

“While we believe Mazagon Dock has a good order pipeline, visibility on orderbook accretion remains low. Taking cognisance of impressive Q3FY22 performance, we raise our FY23E/FY24E EBITDA by 59%/16%, respectively. As a result, our revised target price works out to Rs 600 (earlier: Rs 575). Maintain SELL,” said ICICI Securities.

Abhijeet from Tips2trade said, "Rs 703 is a strong support for Mazagon Dock Shipbuilders on the daily charts. A daily close above Rs 738 could lead to targets of Rs 800-840 in the coming days."

About Mazagon Dock

The company is one of the leading shipbuilding yard in India. It was incorporated as a Private Limited Company in 1934. The company's current portfolio of designs spans a wide range of products for both domestic and overseas clients. Mazagon Dock has also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessel, water tankers, tugs, dredgers, fishing trawlers, barges & border out posts for various customers in India as well as abroad. MDL have also fabricated and delivered jackets, main decks of wellhead platforms, process platforms, jack-up rigs etc.

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