Indian benchmark indices gained over a per cent last week. In the early part of the week, a rally in the US and other global markets had a positive rub-off on the Indian market too.
Mazagon Dock
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Several stocks outperformed Sensex and Nifty last week, handing out tidy gains to their investors. Stocks of shipbuilding companies have been the flavour of the week – with two of them, Mazagon Dock and Cochin Shipyard featuring in the top three gainers.
The stock of India’s defence shipbuilding company, Mazagon Dock, topped the list with a massive 28 per cent up move in the last four trading sessions. Interestingly, the stock has more than doubled in the last two months, thanks to the strong performance in the June quarter, wherein the company posted record quarterly revenue of ₹2,230 crore, implying an 84 per cent growth and an over two-fold jump in net profit to ₹217 crore. A robust outlook for FY23, on the back of a strong order book totalling ₹43,343 crore given the Indian Navy’s aggressive plan to acquire more assets, should augur well for the the company. The ongoing geopolitical tensions worldwide and the Indian Government’s endeavour to strengthen the country’s defence system have had a positive rub-off on all companies that get a good share of business from the defence. The stock currently trades about 18 times its trailing twelve-month earnings, compared with about 24 times for the industry.
Cochin Shipyard
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The stock of India’s largest shipbuilding PSU Cochin Shipyard also had a good rally last week, gaining about 19 per cent in the previous four sessions. Last month, the Prime Minister commissioned the country’s first indigenously designed and built aircraft carrier INS Vikrant at Cochin Shipyard. The company also posted healthy performance in the latest June 2022 quarter, growing revenue and profit by 33 per cent and 53 per cent year-on-year. The stock currently trades at 11.4 times its trailing twelve-month earnings, implying an over 50 per cent discount to the industry.
Mahindra CIE Automotive
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The stock of multi-technology automotive component supplier Mahindra CIE Automotive was the other outperformer last week, recording a 15 per cent gain over the previous week. The optimistic comment from the management regarding its India business, whose share is expected to increase from 50 per cent to 60 per cent and the strong demand environment and capacity additions had helped the increased investor interest in the counter.
According to management sources, capacity additions will be across stamping, magnetics, and warm forging operations. Also, the company will benefit from the favourable change in the demand dynamics for the commercial vehicle segment, with the Indian economy showing resilience even in a volatile and challenging global environment. The company reported revenue and profit growth of 33 per cent and 39 per cent in the June 2022 quarter, compared to the same period last year. The stock currently trades at 20 times its twelve-month trailing earnings, which is broadly in line with the industry.
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