Multibagger Mazagon Dock Shipbuilders’ share price jumps 14.5% to hit all-time high: Should you buy, sell or hold?

The confidence in defence stocks remains high with rising capex and the government’s ‘Make in India’ initiative, along with rising export orders. These factors seem to have boosted Mazagon Dock Shipbuilders’ share price. 

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Strong Q4 expectations

Expectations remain high from Mazagon Dock Shipbuilders. Analysts at Antique Stock Broking expect 19 per cent year-on-year growth in net profit to ₹378 crore in Q4 with strong improvement in operating performance. The Earnings before Interest Tax Depreciation and Amortisation (EBITDA) are likely to grow 45 per cent year on year to ₹304.4 even though revenue may remain flat. 

Mazagon Dock Shipbuilders remains among the four top picks of Antique Stock Broking in the defence sector.

Strong order book

Analysts at Anand Rathi Research say Mazagon Dock Shipbuilders’ order backlog of about ₹40,000 crore, which translates to five times trailing twelve-month revenues, could imply earnings growth at a CAGR of 20 per cent over FY23-26. 

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Mazagon Dock Shipbuilders is well placed in the defence shipyards industry in terms of getting large-scale contracts for warships in future from the Indian Navy.

Analysts at Anand Rathi Research said large-scale orders of next-generation destroyers (with an expected value of ₹50,000 crore) and the next phase of conventional submarines (with an expected value of ₹43,000 crore) give comfort in terms of future order inflows.

Top Edge pick of Anand Rathi 

Mazagon Dock Shipbuilder is a Top Edge pick of Anand Rathi with a target price of ₹3,400, indicating a 24 per cent upside from current levels of Mazagon Dock Shipbuilders share price at ₹2,737. They have given a time frame of 6-9 months and stop loss at ₹2,200. 

As per Anand Rathi Research, for the past 3-4 quarters, the Mazagon Dock Shipbuilders share price was consolidating in a rectangle band of ₹1,800  to ₹2,500.  Finally, there is a breakout from this range, and that too with exceptional volumes.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 17 May 2024, 05:12 PM IST