Defence PSU’s Corporate Action Today, Shares Jump: Detailed Outlook & Overview

By Malvika Gurung — Shares of the leading defence public sector undertaking shipyard stock Mazagon Dock Shipbuilders (NS:) (MDL) surged 4.2% to Rs 448.66 apiece at the time of writing on Monday, as they traded ex-dividend in the session.

The defence PSU had announced a final dividend of Rs 1.63/share and has fixed the record date for shareholders eligible to receive the final dividend benefit as September 20, 2022, as per the company’s exchange filing.

In the past one year, Mazagon Dock Shipbuilders has declared an equity dividend totalling Rs 10.56/share, as per Trendlyne data. This translates to a dividend yield of 2.36% at the current share price.

The warships and submarines manufacturer for the Indian Navy and offshore platforms scrip has rallied almost 50% in the past four weeks, thanks to a strong order book amid a favourable environment.

Defence stocks have been in limelight for some time now as the country aims at modernising its armed forces, leading to a large order book and the Government’s push for indigenisation of platforms and sub-systems.

Brokerage ICICI Direct has recently initiated a Buy call on the mid-cap stock on the company’s execution capability pegged to improve in the upcoming period. MDL’s next two years’ revenue CAGR is forecasted at 18.2% vs. 7.5% in FY19-22.

The brokerage has set a target price of Rs 560/share on the stock, an upside of 25% compared to the current price.

Further, FIIs have consistently hiked their holdings in the stock from 0.67% in June 2021 to 2.47% as of June 2022.

“Defense sector is buzzing currently on the back of a strong order book, orders from GOI under the Ministry of Defense, technological advancements and requirements according to the geopolitical environment and export orders. This gives us visibility of up to 4-5 years as the country needs to match the international standards,” stated Ashwin Patil of LKP Securities.

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