1:2 Stock Split By Zero-Debt Defence PSU, Record Date - Dec 27; Stock Up 100% YTD, Is It Overvalued To Buy?

Mazagon Dock Shipbuilders, a zero-debt defence PSU company, is a multi-bagger of 2024 with returns of more than 100% to investors year-to-date. The stock has journeyed from below Rs 2,300 levels to even cross over Rs 5,850 zones. However, currently, the stock is flirting around Rs 4,750, and it is going to be in focus this week because of its first-ever split in the ratio of 1:2. Is Mazagon Dock overvalued and should investors buy before the ex-split date?

Mazagon Dock Shipbuilders Share Price:

Last week, on Friday, the PSU stock witnessed a massive correction to end at Rs 4725.55 apiece, down by 6.22% on BSE. Its market cap also pulled back to Rs 95,309.62 crore. Following this downfall, the stock ended the trading week from December 16th to 20th in red with a decline of 4.14%. Investors booked profits as Mazagon Dock had risen to hit the Rs 5,150 mark.

Despite last week's bearish note, Mazagon Dock continues to be a multi-bagger of 2024 so far. YTD, the stock has soared by 107% on BSE. The stock's month-on-month and six-months performance is also in green with upside of 13.2% and 19.20% respectively. The stock's 52-week high and low is at Rs 5,859.95 and Rs 1,797.10 respectively.

Mazagon Dock Shipbuilders Stock Split:

The defence giant has announced a stock split in the ratio of 1:2. This means the sub-division off of existing 1 (One) Equity Share of the face value of Rs.10/- (Rupees Ten Only) each fully paid up into 2 (Two) Equity Shares of the face value of Rs. 5/- (Rupees Five Only) each fully paid up.

The record date to determine the eligibility of shareholders for the stock split is fixed on Friday 27 December, 2024. This will be Mazagon Dock's first ever stock split.

What are the advantages of Stock Split In General?

According to discount broker, Alice Blue, the main advantage of a stock split is increased affordability, allowing more investors to participate. It enhances liquidity, boosts trading activity, and signals potential growth, often improving investor confidence and market perception without altering the company's fundamental value.

Generally, share splits mean that listed companies can split their existing shares into a ratio decided by them for a host of reasons. These could be done to improve liquidity, lessen the value of the stock, make it cheaper or simply attract new buying from both existing and new investors.

Is Mazagon Dock Shipbuilders Stock Overvalued?

As per Alpha Spread report, the Estimated DCF Value of one MAZDOCK stock is 1 914.35 INR. Compared to the current market price of 4 724.1 INR, the stock is Overvalued by 59%.

Should You BUY Mazagon Dock?

Brokerage Antique Stock Broking has recommended BUY on Mazagon Dock in a pre-split outlook with a target price of Rs 5,513 per share.

Mazagon Dock is also among the top technical picks of Axis Securities. The brokerage set a target of Rs 4965 & Rs 5085.

About Mazagon Dock:

It was incorporated as a Private Limited Company in 1934. After its takeover by the Government in 1960, Mazagon Dock grew rapidly to become the premier war-shipbuilding yard in India, producing warships for the Navy and offshore structures for the Bombay High.