Mishra Dhatu Nigam up 50% in two weeks on robust outlook

Shares of Mishra Dhatu Nigam Ltd have surged over 50% in the last two weeks on expectation of higher growth in the coming quarter amid a strong order book. Sentiment for the stock also improved after the Union Budget raised its allocation for space research.

The stock was trading at ₹225.30 on BSE, up 4% from its previous close. The stock was listed on 4 April 2018 with an issue price of ₹90 a share, and since then it has surged nearly 152%.

The Budget allocated ₹13,479.47 crore for fiscal 2021 for new projects planned by the Indian Space Research Organisation (ISRO), up 8% from the previous year.

"Increase in Indian space expenditure budget has been one of the key tailwinds for Midhani (Mishra Dhatu Nigam). Significant expenditure budget CAGR towards space (15.8% CAGR over the past six years), joint product development with Indian Space Research Organisation (ISRO) for strategically important materials, relatively small scale of operations, all tilt the risk reward in favour of Midhani", said ICICI Securities in a note to its investors.

The brokerage firm has initiated buy rating on the stock with a target price of ₹156 a share.

Also, the recent joint venture with National Aluminium Co Ltd for setting up high-end aluminium alloy production plant in Andhra Pradesh is likely to boost its topline in the near future, analysts said. The JV -- Utkarsha Luminium Dhatu Nigam Ltd -- was set up on 21 August and is yet to start operations.

"With a strong order book in hand which is providing a visibility of nearly 6-8 quarters, new product developments and better margins shown by the company, our conviction in the stock idea has further strengthened," said an analyst, who did not wished to be named.

Managing director Dinesh Kumar Likhi, in an analysts' call recently, had said he expects a much better March quarter.

"So we expect that next year also, the order book will be to the extent of ₹800 crore and with a starting order book of ₹1,500 crore this year, the 1st April '20, we feel that our growth of next year also will continue in the same pattern," Likhi added.

The company posted 258% surge in its net profit to ₹60.50 crore in the December quarter, while revenue jumped 35% to ₹206.87 crore.