Mazagon Dock Continues To Fall After ICICI Securities Sees 77% Downside

Shares of Mazagon Dock Shipbuilders Ltd. continued to fall for a second day running on Tuesday after ICICI Securities maintained a sell rating on the stock and saw a significant downside over valuation concerns.

The shares of the defence PSU dipped more than 6% to an intraday low of Rs 4,408 apiece on the National Stock Exchange after the brokerage firm saw a 77% downside to the stock price.

ICICI Securities said that Mazagon Dock Shipbuilders stock is overvalued at the current market price. “Despite factoring in the potential orders of P75 (three additional submarines), P75I and next-gen destroyers, and margins at an elevated level in the near term, we believe the stock is overvalued at the CMP,” the brokerage firm said in the note.

Even though ICICI Securities raised the target price of Mazagon Dock Shipbuilders stock to Rs 1,165 apiece from Rs 900 earlier, it implies a massive downside of 77% from Friday’s close. 

“We estimate deliveries in FY25/26E are likely to be ahead of schedule as well, and hence, we have increased our EPS by 51%/73% for FY25/26E, respectively. Maintain sell with DCF-based revised TP of Rs 1,165 (earlier Rs 900),” ICICI Securities added.

Over the past three months, shares of the Navratna PSU surged almost 70% and hit a 52-week high of Rs 5,859.95 in July.  
The stock has gained over 120% in the last 6 months and more than 155% in the last one year. 

Mazagon Dock Shipbuilders announced its June quarter results last week, reporting robust performance. The consolidated revenue from operations increased 7.8% year-on-year to Rs 2,357 crore in Q1 from Rs 2,173 crore.

Its net profit grew 121% YoY to Rs 696 crore in Q1 against Rs 314 crore in the same quarter a year ago. Ebitda was up by 2.7 times to touch Rs 640 crore in the June quarter this year.