Multibagger Mazagon Dock gets ‘sell’ call from ICICI Securities; brokerage sees over 66% downside – here's why

livemint.com:

Mazagon Dock Shipbuilders has received a ‘sell’ call from domestic brokerage house ICICI Securities as it believes the positives have already been factored in.The brokerage has a target price of ₹900 for the stock, indicating a massive downside of over 66 percent from its previous close of ₹2,679.30 (as on June 4)."In our view, factoring in the potential orders of P75 (3 additional submarines), P75I, and next-gen destroyers, and margins at an elevated level in the near term, we believe the positives have already been factored in the stock price. We maintain SELL on MDL with a revised TP of INR 900 (earlier INR 880/share), as per DCF methodology," it said.The defence stock has delivered multibagger returns over the past year, soaring by 171% amid the PSU rally wave.

However, in 2024 year-to-date, the stock has risen only 13%, following a 19% drop in two of the three sessions in June. In contrast, it saw substantial gains of 35.5% in May and 26% in April.

Before these increases, the stock experienced two consecutive months of decline, falling 9% in February and 10.5% in March. In January, the stock remained relatively flat, with a modest increase of 0.4%.After the recent fall, the stock is now 23 percent away from its record high of ₹3,478.15, hit on May 30, 2024.

Meanwhile, it is still over 170 percent higher from its 52-week low of ₹990.00, hit on June 8, 2023.Meanwhile, in the last 3 years, the stock has soared over 1177 percent.The brokerage noted that Mazagon Dock Shipbuilders (MDL) reported a robust Q4FY24 with an EBITDA of ₹520 crore, marking a 1.5x year-on-year increase. This performance was supported by an improved EBITDA margin of 16.9 percent, up from 10.1 percent in Q4FY23, due to a refund of liquidated damages