Mazagon Dock Shipbuilders, a stock that has seen incredible growth, has dropped over 17% in August so far. This decline comes after a year of strong gains and has been driven by worries about high valuations and negative advice from brokerages.
The stock had a great run, rising 22.5% in July, 34.5% in June, 35.5% in May, and 26% in April. Before this rally, it had seen some losses, falling 10.6% in March and 9% in February, with a small gain of 0.4% in January.
So far in 2024, the stock has climbed 89.5% and delivered a 134% return over the past year. It hit a high of ₹5,859.95 in July but has since dropped 26% to ₹4,322. Despite this recent fall, it’s still up 148% from its 52-week low of ₹1,742 recorded in October last year.
Technical Analysis
Hashim Yacoobali from South Gujarat Shares and Sharebrokers mentioned that after the stock’s big rise from ₹1,795 to ₹5,830, it faced selling pressure. It has recently broken below key moving averages, and he expects it to find support between ₹3,777 and ₹3,234. Investors looking for long-term opportunities might find these levels appealing.
Aditya Gaggar from Progressive Shares noted that the stock has corrected nearly 30% after reaching its high in July. According to a te
chnical pattern called the Bullish Bat Pattern, the stock could bounce back to around ₹4,760 to ₹5,180.
Fundamental Analysis
ICICI Securities has a ‘sell’ recommendation, forecasting a possible drop of 73%. They have set a price target of ₹1,165, arguing that the stock is currently overvalued. They anticipate future orders but think that earnings per share will stay between ₹95 and ₹120 in the coming years. They are also concerned about potential delays in order execution.
Nirmal Bang also recommends selling, citing high valuations. They have set a target price of ₹4,468, suggesting just a 3% potential upside from the current price. They believe that even with positive sector trends, the stock’s current price is too high.
Both ICICI Securities and Nirmal Bang agree that Mazagon Dock Shipbuilders is overvalued and see significant downside risks despite its recent performance.
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