Mazagon Dock Stock in Spotlight After ICICI Sec Predicts 77% Drop; Deepak Shenoy Weighs In

A recent report from ICICI Securities has caused quite a stir on social media by predicting a steep 77% drop in the share price of Mazagon Dock Shipbuilders. On August 16, the brokerage firm issued a ‘Sell’ recommendation for the PSU defense stock, citing high valuations. They set a target price of ₹900 per share, a significant drop from the current market price of around ₹4,400.

Deepak Shenoy, CEO of Capitalmind, responded to this report on X (formerly Twitter), pointing out that ICICI Securities has repeatedly predicted a similar drop in Mazagon Dock shares over the past year. However, these predictions have been wrong each time, as the stock has continued to rise.

Shenoy shared his thoughts on X, saying, “What do you do when you own a stock and someone sends you a SELL report with ‘77% downside’? You check to see what they’ve said earlier. Take Mazagon Dock as an example (we own this stock). ICICI Sec issued a sell rating, predicting the stock would drop to 1165 (77% down from 5000).”

He noted that in May 2024, when the stock was around ₹3,300, ICICI Securities also issued a sell recommendation with a target price of ₹900, predicting a 73% drop. Despite this, the stock has climbed by 50% since then.

Similarly, in November 2023, when Mazagon Dock was priced at ₹2,000, the brokerage predicted a 60% drop, yet the stock has more than doubled since. And in July 2023, when the stock was ₹1,500, they estimated a 60% drop to ₹600, but the stock has since tripled in value over the year.

What Should You Do?

Shenoy stressed that while making wrong market predictions is common, the real problem comes when people follow such reports without considering the bigger picture.

“There’s nothing wrong with being wrong, and maybe they’ll eventually be right. But that’s not the point. The point is that you can miss opportunities if you blindly trust these reports. Looking at the past predictions of the ‘expert’ can help you decide how much to trust the report,” Shenoy explained.

He added that his strategy is to respond to market movements rather than trying to predict them.

“My favorite approach is: don’t predict, respond. We recently reduced our position but stayed invested as the stock rose, using a deep trailing stop, even though the valuation seems high. I’ve learned the hard way not to sell based solely on imagined valuations,” he said.