Mazagon Dock Shipbuilders hits fresh peak; the stock has jumped over 380% in 12 months

Mazagon Dock Shipbuilders share price: Shares of Mazagon Dock Shipbuilders jumped as much as 19 per cent to hit an all-time high of Rs 2,484.70 apiece on the NSE on Friday (September 8) a day after the company said in its regulatory filing that it had signed a Master Ship Repair Agreement (MSRA) with the US Government represented by NAVSUP Fleet Logistics Center (FLC) Yokosuka.

"This is a Non-Financial Agreement. There are only two shipyards in the country, including MDL, which has signed the MSRA. The agreement is expected to open up voyage repairs of US Navy Ships at MDL," the company added.

The stock eventually ended at Rs 2,219, up 6.28 per cent. Trendlyne's data show that Mazagon Dock's share price has skyrocketed a whopping 383 per cent in the past 12 months (September 8, 2022-September 7, 2022).

Defence sector outlook 

ICICI Securities, in its research report dated September 5, said, "In our view, continued acceptance of necessity (AoNs), orders, and tests even in the pre-election year (general elections are due in CY24) bode well for the defence sector. It allays the apprehensions of investors pertaining to order book accretion. In this respect, we find BEL particularly in a vantage position, having crossed 50 per cent of order flow guidance (of INR 200bn) for FY24 already."

What the brokerage says on Mazagon Dockyard Shipbuilders (MDSL)

MDSL is planning to acquire a new floating dry dock, which may play a pivotal role in constructing eight Next Generation destroyers for the Indian Navy. Valued at over USD 10 billion, next-generation destroyers will be built in two phases. The final configuration is slated for determination next year, with construction commencing in CY26 and induction scheduled for CY31, notes the domestic brokerage.

MDSL has embarked on an active collaboration with the French firm Naval Group to finalise the selection of new equipment for the three additional Kalvari-class submarines. These submarines are anticipated to incorporate significant enhancements in terms of equipment and technology compared to the initial six Scorpene submarines. Besides, the indigenisation levels are expected to be far higher, ICICI Securities added.

It has, however, assigned the stock a 'SELL' rating.