This stock hits record high on winning ₹2,725 cr defence contract; do you own it?

Indian benchmark indices extended rally for the fourth straight session on Monday, with the BSE Sensex and Nifty50 hitting their respective fresh 52-week highs, supported by rally in oil and gas and PSU stocks. In the PSU space, Mazagon Dock Shipbuilders topped the chart by rising over 7% and hit a fresh all-time high on the BSE after the company bagged a contract from the defence ministry.

The state-owned company has signed a contract worth ₹2,725 with the Ministry of Defence for restoring INS Shankush, a submarine of the sub-surface killer (SSK) class. The delivery of the medium refit cum life certification (MRLC) of the second Shishumar class submarine is set for 2026.

Mazagon Dock shares opened 2.65% higher at ₹1,280 against the previous closing price of ₹1,246.85 on the BSE. During the session, the largecap stock rallied 7.5% intraday to hit a new high of ₹1,341, on the back of strong volume. As many as 3.9 lakh shares changed hands over the counter as compared to two-week average volume of 2.73 lakh stocks.

Mazagon Dock has delivered strong returns of 455% in the last one year, rising from its 52-week low of ₹241.60 touched on July 1, 2023. In the calendar year 2023, the counter has gained 67%, while it has climbed 33% in a month. In the past one week, the multibagger stock has added nearly 8%.

The PSU stock has seen surge in buying activities after stellar financial performance in the March quarter. In Q4FY23, the company’s net profit more than doubled to ₹326 crore in Q4FY23 as against ₹159 crore in the same quarter of last year. The revenue from operations stood at ₹2,078.6 crore, up 49% against ₹1,396.4 crore in the year-ago period.

On the operating front, earnings before interest, tax, depreciation and amortisation (EBITDA) jumped nearly three-fold to ₹211 crore versus ₹77 crore in the year-ago period. EBITDA margins doubled to 10.1% versus 5.5% in the corresponding quarter of last year.

For the full financial year FY23, the net profit jumped 82% to ₹1,119 crore as against ₹611 crore in FY22, while the revenue grew by 37% YoY. At the end of March 2023 quarter, the company 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.

The board of directors of the company also recommended a final dividend of ₹6.86 per equity share. This was in addition to an interim dividend of ₹9.10 per equity share paid for the year. At the current share price, the dividend yield stands at 0.82%.

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