This defense stock offers a 40% return to investors in one month; Should I buy?


Mazagon Dock Shipbuilders stock price: Shares of Mazagon Dock Shipbuilders Limited (MDL) have jumped nearly 40% in the past month. The stock, which ended up 11.6% at Rs 394.80 on BSE on Monday, offered an impressive return to its investors.

MDL is one of India’s four strategic defense shipyards and the only one manufacturing destroyers and submarines in India. It is a Defense Public Sector Undertaking (DPSU) under the Ministry of Defense (MoD).

The company is engaged in the construction and repair of naval vessels and submarines for the Ministry of Defense for use by the Indian Navy/Indian Coast Guard, and vessels for commercial customers with a capacity maximum shipbuilding and submarine construction of 40,000 DWT (ton deadweight). It is the only Indian shipyard to have built conventional destroyers and submarines for the Indian Navy.

MDL mainly operates through two divisions: shipbuilding and subsea or heavy engineering. The shipbuilding division includes the construction and repair of warships, while the submarine and heavy engineering division includes the construction, repair and refitting of diesel-electric submarines.

Meanwhile, over the past month, MDL has outperformed the market by surging 40% after the company reported a healthy earnings package and strong order book position. By comparison, the S&P BSE Sensex rose 0.7% over the same period.

The company released a strong set of quarterly numbers despite rising raw material costs. The cost of raw materials consumed soared to Rs 1,334.97 crore from Rs 600.43 crore a year ago. On a consolidated basis, operating revenue stood at Rs 2,230.32 crore in the quarter ended June compared to Rs 1,214.24 crore last year.

During the April-June 2022 quarter, MDL recorded 2 orders from the Container Corporation of India (CONCOR) for the manufacture of 2,500 shipping containers. The company initiated the design and development of a native midget submarine. The company has also developed a 6-passenger hydrogen fuel cell electric vessel in conjunction with Tata Advanced Systems.

Should you invest?

Giving it a buy call, Santosh Meena, Head of Research, Swastika Investmart, said: “The stock witnessed a breakout of a bullish head and shoulders reverse formation as volume increased. on the daily chart and retested its neckline support around Rs 300 It is now entering the next leg of a rally where Rs 380 is an immediate resistance level; above that we expect a move towards the level Rs 450+ On the other hand, Rs 300 is a major support for any correction MACD (Moving Average Convergence Divergence) supports the current strength while momentum indicator RSI (Relative Strength Index) is also in positive balance.

Ravi Singh, Vice President and Head of Research-ShareIndia, said, “Mazagon Dock has outperformed the market in recent days after the company reported a healthy earnings package and strong order book position. For FY23, the company has an order book worth Rs 43,343 crore. The company’s stock price is showing a strong bullish candle on the daily and weekly charts and the build-up in volume indicates a new uptrend from current levels. Investors can enter the stock for a long-term outlook target of 450 levels.

The views and investment advice of the experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before making any investment decision.

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