In a note on Friday, August 22, JPMorgan maintained its “underweight” recommendation on Mazagon Dock, with a price target of ₹2,468, which implies a potential downside of another 11% from Thursday’s closing levels.
JPMorgan wrote in its note that the risk-reward ratio for Mazagon Dock still remains adverse, despite the stock having corrected by more than a quarter from its peak. It highlighted that the fourth quarter of the previous and first quarter of the current financial year were very weak due to provisioning-related cost overruns.
Additionally, the large order award for three P-75 Scorpene submarines is yet to materialise and has been delayed compared to the earlier guidance issued by the company.
“If these awards get delayed further, it would pose a risk to financial year 2028 revenue estimates, given that it takes two years for revenue to start being recognised,” JPMorgan wrote.
Currently, the brokerage believes that there appears to be little incremental positive newsflow on the six additional P-75I submarine order award as well, thereby limiting the triggers for the defence PSU.
Six analysts have coverage on Mazagon Dock, of which, four of them have a “buy” rating, while two others have a “sell” recommendation. JPMorgan’s target is the second-lowest for Mazagon Dock on the street, following Asian Market Securities’ target of ₹2,100.
Shares of Mazagon Dock Shipbuilders ended 0.6% lower on Thursday at ₹2,757. The stock is down 6% in the last one month and has trimmed its year-to-date gains to 23%.
