Mazagon Dock share price hits new 52-week high, rises over 7%; Here's why
Mazagon Dock shares surged over 7% to a new 52-week high, as analysts note increased activity in India's defense sector, particularly in shipbuilding, following a meeting between the US and India defense ministers.
PremiumMazagon Dock shares touched a new 52-week high and jumped over 7% on Tuesday's trade. According to analysts, a lot of action is seen in the defense space in the last one week and high focus is on shipbuilders as US Secretary of Defence met India Defence Minister to discuss cooperation in the maritime defence sector. Mazagon Dock share price opened at ₹1,019 apiece on BSE, and touched a intraday high of ₹1,062 and low of ₹1,015.15.
The government appears to be particularly committed to this sector, according to Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, given that India and the United States have agreed on a framework for collaboration in the defence industry over the coming years.
By raising the domestic procurement budget share from 68% for FY23 to 75% for FY24e, it may expect growth of roughly 20% compared to the under 10% growth anticipated for overall capital expenditure last FY. According to Tapse, the industry appears to be quite promising overall over the long term.
On the technical front, the stock price has rise 267.3% and outperformed its sector by 241.6% in the past year, as per trendlyne data. The stock is trading at high day volume of 9 million.
"The shipping stocks have been in momentum since the last couple of weeks and this stock has given strong traction since yesterday, with prices up more than 25% this week and today up by around 7%," said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.
According to Bhosale, overall bias remains positive however after such a strong move one should ideally wait for dip to re-enter, whereas already holding positions can hold their positions. Immediate support is at 930 whereas 1200 is next minor resistance.
However, ICICI Securities recently reported that it was concerned that a lack of order visibility would undermine its optimistic revenue forecast for the near future. Because of this, the brokerage has maintained a 'sell' rating for the company due to the unfavourable risk-reward ratio at the current market price.
"While we expect robust revenue growth until FY25, we believe earnings growth is likely to recede owing to an uncertain order pipeline. In Q4FY23 earnings call, management mentioned bids for P-75I programme are likely to be submitted by 01 Aug’23 with evaluation of bids taking another 18 months. For FY24, management indicated possible order inflow of ₹42 billion along with Medium Refit and Life Certification (MRLC) of a submarine spread over 3-4 years. Besides, there is no clarity on the timeline of repeat orders for destroyers," said the brokerage in its report.
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