Stock Of The Day: Mazagon Dock Shares Yet To Hit Bottom As 150% Rally Cools Off
Shares of the stock split bound Mazagon Dock Shipbuilders Ltd. are poised for further downside in 2025 as the defence giant's stock trades in the so-called 'bearish territory' after a 150% rally early this year.
The domestic warship manufacturer's stock trades ex-date on Thursday for its 1:2 stock split.
The stock currently tests the entry into the bearish zone—a fall of 20% from its 52-week high—but a fall less than what its peers have seen. The counter finds support in the Rs 4,595 to Rs 4,545 level which is also the 2-standard deviation below the 14-day moving average.
However, the temporary momentum in the lower time frame looks negative after the downside switch on Dec. 18. The counter currently trades below the 21-day exponential and 14-day simple moving average.
A momentum change to the upside could trigger the stock to an immediate resistance of Rs 4,850. A breakout of that level could send the stock to the psychologically important Rs 5,000 mark.
The stock has risen 104% during the last 12 months. Shares rose as much as 3.14% during the day to Rs 4,774 apiece on Thursday on the NSE, compared to a 0.53% rise in the benchmark Nifty 50. The relative strength index was at 49.
Two out of the five analysts tracking the company have a 'buy' rating on the stock, two suggest a 'hold' and one has a 'sell', according to Bloomberg data. The average of 12-month analyst price target implies a potential downside of 14%.
Stock Split — Key DetailsÂ
Mazagon Dock has fixed Friday, Dec. 27, as the record date for determining the eligibility of shareholders for its proposed stock split. Each existing equity share with a face value of Rs 10 will be subdivided into two equity shares with a face value of Rs 5 each.
Consequently, Thursday, Dec. 26, will serve as the ex-date for the stock split, aligning with the T+1 settlement cycle. The record date is set to identify the shareholders entitled to receive benefits such as dividends, split shares, or bonus shares.
Earlier, on Oct. 22, Mazagon Dock had announced another stock split. In addition to this, the defence company's board had announced an interim dividend of Rs 23.19 per share with record date set for Oct. 30. This follows a final dividend of Rs 12.11 per share declared on Sept.19.
Defence Revival In 2025Â
Indian defence firms are set for a renewed rally in the upcoming year after most of these stocks fell to the 'bearish zone' on valuation woes post a strong rally in the first half of 2024.
The optimism for these companies comes amid robust order books, strategic policy measures and a focus on indigenisation for defence materials, according to analysts.
Order inflow in the defence sector will increase sharply in financial year 2025, Elara Capital says, as India tries to meet the defence capital expenditure target. The share of defence spending in April-October stands 36% lower on the year.
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