When Should You Buy Mazagon Dock Shipbuilders Limited (NSE:MAZDOCK)?

Mazagon Dock Shipbuilders Limited (NSE:MAZDOCK), is not the largest company out there, but it saw a decent share price growth in the teens level on the NSEI over the last few months. As a ₹426b market cap stock, it seems odd Mazagon Dock Shipbuilders is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Mazagon Dock Shipbuilders’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Mazagon Dock Shipbuilders

What's The Opportunity In Mazagon Dock Shipbuilders?

Good news, investors! Mazagon Dock Shipbuilders is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mazagon Dock Shipbuilders’s ratio of 32.13x is below its peer average of 54.79x, which indicates the stock is trading at a lower price compared to the Aerospace & Defense industry. What’s more interesting is that, Mazagon Dock Shipbuilders’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Mazagon Dock Shipbuilders look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 30% over the next couple of years, the future seems bright for Mazagon Dock Shipbuilders. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since MAZDOCK is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MAZDOCK for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MAZDOCK. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 1 warning sign for Mazagon Dock Shipbuilders you should know about.

If you are no longer interested in Mazagon Dock Shipbuilders, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.