• Tue. Feb 27th, 2024

Masagaon Dock extends rally for 8th straight day; Zooming 27% in two days

Masagaon Dock extends rally for 8th straight day;  Zooming 27% in two days
Shares of Masagaon Dock Shipbuilders closed at Rs 1,062 as they rose 8 percent on the BSE in intraday trade on Tuesday despite heavy volumes. In the last two trading days, the state-owned shipbuilding & allied services company’s stock zoomed 27 percent. It has been quoted higher for eight consecutive trading days, rising as much as 41 percent during the period. 09:27 AM; The S&P BSE Sensex fell 0.04 per cent, while Masagaon Dock Shipbuilders rose 7 per cent to Rs 1,056. Average trading volume over the counter is up 1.5 times today. 4.9 million equity shares changed hands on NSE and BSE in the first 15 minutes of trading. Over the past one year, the company’s share price has surged 280 per cent as it reported strong earnings and a healthy order book position for the financial year 2022-23 (FY23). In comparison, the S&P BSE Sensex rose 12.8 percent during the period. For FY2023, Masagaon Dock Shipbuilders posted an 83 per cent (YoY) rise in profit after tax (PAT) at Rs 1,119 crore on healthy operational performance. Income from operations rose 36.5 percent to Rs 7,827 crore. As on March 31, 2023, the company’s total order book position stands at Rs 38,755 crore, providing execution stability and steady cash flow. Masagaon Dock Shipbuilders is primarily engaged in the construction and maintenance of ships, submarines, various types of vessels and allied engineering products for its customers. The current orderbook is likely to be exhausted by FY27, with revenues peaking in FY2025. In FY24, the company expects an order of Rs 3,200 crore for patrol vessels for the Indian Coast Guard and an export order of Rs 1,000 crore. Going forward, analysts at ICICI Securities perceive higher execution till FY25E based on current orderbook visibility. However, the longer gestation period means that free cash flow is likely to decline from FY25E onwards, resulting in a cash crunch. “Masagaon Dock Shipbuilders’ lack of order visibility offsets its recent strong revenue estimates. As a result, we see negative risk-reward at current market prices,” the brokerage firm said.

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