The last one year has been challenging for the markets. However, despite all gloom, some stocks have jumped with strong gains.
For example, Mazagon Dock Shipbuilders' rise in the last year has been dazzling.
The stock has jumped almost 190 percent in the last one year while the market sentiment has been fragile due to multiple headwinds. The mood of the market has been understood by the fact that the equity benchmark Sensex has been flat for the period.
The company, a Government of India undertaking, is one of the leading shipbuilding yards in India. It produces warships for the Navy.
Thanks to the government initiatives like ‘Aatma Nirbhar Bharat’ and ‘Make in India’, the company is witnessing its heyday.
On December 20, 2022, the company said it "delivered the fifth Scorpene Submarine ‘VAGIR’ of project P-75 to the Indian Navy, subsequently to be commissioned into Indian Navy as INS Vagir."
"Mazagon Dock has undertaken and completed an extensive modernisation programme for its infrastructure and facilities to meet the increasing demand of the nation’s maritime needs. The company is capable to build 10 capital warships and 11 submarines simultaneously," said Mazagon Dock in a BSE filing on December 20, 2022.
Analysts think the stock has some steam left for the medium term but some profit-taking in the short term may be a good move.
Naveen Mishra, Senior Research Analyst - Equity Research at CapitalVia Global Research, pointed out that the stock has been maintaining a respectable ROCE (return on capital employed) throughout the last few years.
Net income has been growing significantly year over year. However, Mishra added that the company's drawbacks include the fact that it has experienced inconsistent sales growth over the past three years and profit growth is also not up to the mark.
Should one buy this stock?
Mishra said as there was a sharp rise in its prices last year, there can be a pause in the rising trend, but overall, the stock is holding well on the higher side.
"Sustainability of price above ₹700 is a positive indication. Investors can go for buy on dip strategy," said Mishra.
Among the technical analysts, Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, observed that the stock, after a decent rally, has given a short correction from the peak level of ₹936 to bottom out near ₹700.
It then saw a pullback after which the stock witnessed a consolidation phase between ₹780 and ₹830 levels.
Parekh said a decisive breach above ₹830 would indicate a breakout for a further fresh upward move. At the same time, a decisive breach below the 50EMA level of ₹775 would weaken the bias.
"The overall trend remains strong. The RSI has also flattened out which is showing consolidation, indicating a further upward move in the coming days," said Parekh.
Jigar S. Patel, Senior Manager - Equity Research, Anand Rathi Share and Stock Brokers, said if one is already holding this stock, he or she should book some profits at ₹825-850 levels if tested in the coming few sessions.
Patel pointed out that the stock, at the current juncture, has made a negative crossover (12 DEMA and 26 DEMA) along with MACD dropping below zero, indicating some weakness in the counter.
"Volume is also drying out as prices increase which is an anomaly according to volume spread analysis. A fresh buying at the counter is not advisable at the current market price," said Patel.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.