New Delhi: Brokerage ICICI Securities downgraded its rating on Engineers India to ‘reduce’ from ‘hold’ while maintaining its rating at ‘sell’ on Mazagon Dock Shipbuilders despite better-than-expected performance and a robust order pipeline. Mazagon Dock’s share price was down 2.03 per cent at 1:43 pm on Friday. However, the company’s share price has surged 300 per cent over the past year. Engineers India’s share price was down 0.14 per cent to Rs 251.50 apiece on Friday at 1:43 pm, but up 126.48 per cent year-on-year.
ICICI Securities on Mazagon Dock Shipbuilders
ICICI Securities maintained its ‘Sell’ call on defence-focused company Mazagon Dock Shipbuilders with CMP at Rs 3,295 apiece and a target price of Rs 900 per share. While the company reported better-than-expected earnings in Q4FY24, with a strong order book comprising 3 potential submarine orders, Mazagon Dock’s positives have already been factored in, according to ICICI Securities. The company revised its sell target price to RS 900 from Rs 880 per share earlier. While the brokerage expects order inflows worth Rs 1,200 billion over the coming 5-7 years, it said there was no clarity over the timeline for execution or ordering.
ICICI Securities flagged 3 key risks for MDL:
Higher than expected margin
Higher than expected order book value
Repeat of the frigate order that has not been counted by the brokerage
Reduce call on Engineers India
ICICI Securities has changed its rating in Engineers India to ‘Reduce’ from ‘Hold’ with a CMP of Rs 252 and a target price of Rs 225 per share, down from Rs 250 per share earlier. ICICI Securities share the following reasons for the downgrade:
Lower than expected revenues at Rs 33 billion for FY24, down 1.5 per cent year-on-year.
The company’s order inflows were down 28 per cent year-on-year
Engineers India’s share price is at 25xFY24 profit after tax, compared to a historical price of 15x.
The brokerage flagged 3 risks to this view:
Higher execution
Higher margins from consultancy revenue
Outperformance by joint ventures
ICICI Securities changed its rating on Engineers India to reduce from hold citing share price overvaluation and lack of clarity around execution, while slashing the target price to RS 225 per share. The brokerage maintained a sell rating on Mazagon Dock Shipbuilders saying the order book was already priced into the stock value. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
