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Business News/ Markets / Stock Markets/  Mazagon Dock Shipbuilders share price has risen 272% in last one year; is it still a buy?

Mazagon Dock Shipbuilders share price has risen 272% in last one year; is it still a buy?

Mazagon Dock Shipbuilders, a leading shipbuilding yard in India, has seen its stock rise 272 per cent in the last year, with analysts predicting further gains due to strong orders and the government's Atmanirbhar Bharat and Make in India policies.

Mazagon Dock Shipbuilders is a PSU firm and one of the leading shipbuilding yards in India. (Photo: Hindustan Times)Premium
Mazagon Dock Shipbuilders is a PSU firm and one of the leading shipbuilding yards in India. (Photo: Hindustan Times)

Shares of Mazagon Dock Shipbuilders have seen bewildering gains in the last one year. The stock is up 272 per cent, featuring among the top gainers in the BSE 500 index in that period and analysts believe it can rise even further even though intermittent profit booking cannot be ruled out. The stock hit its 52-week low of 229.65 on BSE on June 20, 2022. As of June 8, 2023, the stock is up 338 per cent from its one-year trough.

Mazagon Dock Shipbuilders is a PSU firm and one of the leading shipbuilding yards in India. It is part of the defence sector as it produces warships for the Navy. It produces products such as cargo ships, passenger ships, supply vessels, multipurpose support vessels, water tankers, etc. for both domestic and overseas clients.

Defence sector stocks have been witnessing strong traction of late on account of positive sentiment in the sector thanks to the government policies such as Atmanirbhar Bharat and Make in India. There has been a healthy flow of new orders both from domestic and international markets.

Swapnil Shah, Director of Research at Stoxbox highlighted that Mazagon Dock started its journey from a small ship repair company into India’s leading multi-unit and multi-product warships builder contributing to India’s Atmanirbhar Bharat’s vision.

He pointed out that FY23 has been an excellent growth year for the company with the topline having a growth of around 37 per cent and significant growth of 83 per cent on a PAT YoY basis. The company has a strong order book in the pipeline with a value as on March 31, 2023, of around 38,755 crore across the shipbuilding, submarine and heavy engineering divisions. This has shown that the company has healthy execution stability.

For the January-March quarter of FY23, Mazagon reported a 105 per cent year-on-year (YoY) jump in net profit at 326.19 crore against a profit of 159.01 crore in the corresponding quarter of the previous financial year. Revenue from operations for the quarter stood at 2,078.59 crore, up 48.85 per cent against 1,396.43 crore in the same quarter last year.

Shah added that the debt-free company now is not only focused on the domestic business which is catering to the private maritime sector and Indian Naval Forces but is dealing with International players also. Recently it signed a deal with Germany to build a diesel submarine which now shows that it will have more international projects in the future.

"With the increase in the defence budget by the Indian Government and more partnerships with international players, the outlook for the company seems to be brighter. Also, the management’s strategy to focus more on shipbuilding rather than mere ship repairing projects will increase its profitability. An increase in the participation of bids by the company on the request for proposals (RFPs) floated through the Ministry of Defence will help the company to grow its revenue and profits in the future," said Shah.

Aamar Deo Singh, Head Advisory at Angel One pointed out that the company has delivered a good profit growth of 19.5 per cent CAGR over the past five years, clocking 37 per cent growth in revenues for the full-year FY23. Further, net profit for the full year grew to 1,119 crore compared with 611 crore in FY22. Investor confidence remains high in the stock and there appears to be an increasing interest in this stock.


The stock's valuation is rich which is a concern at this juncture. Its price-to-book ratio near 5 is high in the industry. The stock's current price-to-earnings (PE) ratio is above its trailing 12-month price-to-earnings (PE) ratio of 18.6. Technical indicator like RSI is in the overbought zone.

Technical analysts are divided on their view of the stock for the short term.

Gaurav Bissa, VP of InCred Equities highlighted that the stock witnessed a strong bounce from the 38.2 per cent Fibonacci retracement of the rise that started in October 2020. It has made a fresh swing high and Bissa believes a weekly close above 935 can result in a fresh swing break, pushing the stock towards 1,120-1,150 levels.

"The stock is comfortably trading above short-term moving averages which is a sign of strength in the short-term trend and the stock has witnessed a bullish MACD crossover which is a fresh buy signal and can result in a swift upside going forward. Existing buyers are advised to trail stop loss to 930 and ride the uptrend whereas fresh buying is advised near 950 levels which will make the risk-reward lucrative," said Bissa.

On the contrary, Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers pointed out that although Mazagon Dock is looking lucrative due to recent up moves in the counter, one should see that it is trading way above 200 DEMA (daily exponential moving average) which comes around 680 so mean reversion could be possible if it gets rejected from the top due to over-bought daily RSI.

"One can book profit in the zone of 1,000-1,100 levels. As of now, no fresh longs are recommended," said Patel.

Mazagon Dock Shipbuilders technical chart
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Mazagon Dock Shipbuilders technical chart

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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 09 Jun 2023, 12:52 PM IST
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