Shares of Mazagon Dock Shipbuilders, a defence PSU firm, rallied 7.7% to record a new life time high of Rs. 1,342 apiece in Monday's trade after the Ministry of Defence signed a ₹2,725 crore contract with the company on June 30 for medium refit with life certification (MRLC) of sub-surface killer class of submarine INS Shankush.
"After completion of MRLC, INS Shankush will be combat ready and will join the active fleet of the Indian Navy with upgraded combat capability," the ministry said in a press release.
"This project is an important step towards the development of MDL as a Maintenance, Repair, and Overhaul (MRO) Hub for supporting the industrial ecosystem of India," the ministry added.
Mazagon Dock shares have been witnessing strong momentum in the last one-year period, climbing from ₹255 apiece to its current position of ₹1,316, generating a multibagger return of 416% led by strong order wins coupled with strong financial performance.
The stock saw a one-way spike after hitting a 52-week low of ₹241 per share on July 04, 2022, and it has since gained 445%. In the last month alone, the stock soared 54.35%. At current levels, the stock is ranked as the top performer in the BSE PSU index.
Meanwhile, defence stocks have seen a surge in buying after the companies' order books were filled by the Ministry of Defence, as the government looks committed to reducing imports of defence products and purchasing locally produced weapons and systems.
The government has allocated a budget of ₹5.94 lakh crore for the defence sector in the union budget for 2023–24, which is an increase of 13% compared to the previous year's allocation of ₹5.25 lakh crore.
For the March-ending quarter (Q4FY23), the company reported a net profit of ₹318 crore as against a net profit of ₹145 crore in the same quarter last year. Revenue for the quarter rose 49% YoY to ₹2,079 crore compared to ₹1,396 crore in the year-ago period.
For the full financial year FY23, its net profits surged 82% to ₹1,119 crore as compared with ₹611 crore in FY22, whereas its revenue witnessed a 37% growth, exceeding its own guidance of 25%.
The company informed that at the end of FY23, it had an order book of ₹38,755 crore, which was spread mainly over two critical projects - P15B Destroyers worth ₹15,814 crore and P17A stealth frigates worth ₹18,501 crore.
Mazagon Dock Shipbuilders is one of India's leading defence public-sector undertaking shipyards under the Ministry of Defence (MoD). It is principally engaged in building and repairing ships, submarines, various types of vessels, and related engineering products for its customers.
03 analysts polled by MintGenie on average have a 'hold' call on the stock.
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