Mazagon Dock shares could fall as much as 73% as positives priced in, says this analyst

NSE

ICICI Securities retained their "sell" recommendation on Mazagon Dock Shipbuilders Ltd., despite the company reporting better-than-expected results for the March quarter. Their price target of ₹900, implies a potential downside of 73% from Friday's closing price. ICICI Securities earlier had a price target of ₹880 on the stock.The brokerage said that all the positives are factored into the price for the stock. It has also factored in three big-ticket potential orders that the company could win in the medium-term - One being an order for six submarines under the P-75I program, the second being an extension of the P75 order for three additional submarines and the third being for next generation destroyers."Despite these orders, we expect Earnings Per Share (EPS) growth to be constrained as the current order book is in peak execution stage and we envisage meaningful contribution from new orders once the current orderbook is exhausted," ICICI Securities wrote in its note. The brokerage expects Mazagon Dock's Earnings Per Share to remain rangebound between ₹80 to ₹110 from financial year 2025 to financial year 2032.Over the next five to seven years, ICICI Securities expects order inflow opportunities worth ₹1.2 lakh crore for Mazagon Dock, but execution timelines remain uncertain. It also sees risks from the depleting current orderbook and uncertainty around the ordering timelines of the Navy's key procurement programs. It also does not see fresh orders being issued from the Navy in financial year 2025.Even after factoring in all available opportunities in their estimates, ICICI Securities said that at the current price, the risk-reward for Mazagon Dock is not favourable.Among the key risks to their estimates, ICICI Securities has listed out higher than expected margins, higher than expected order value and repeat order of frigates, which has not been accounted for. For the March quarter, Mazagon Dock reported a revenue growth of 50% year-on-year to ₹3,103.6 crore. Net profit more than doubled to ₹663 crore. EBITDA margin also expanded by 700 basis points to 17%.The government remains the largest shareholder in Mazagon Dock, with an 84.8% stake as of the March quarter. Retail shareholders with capital of up to ₹2 lakh, have a 9.29% stake in the company.Shares of Mazagon Dock Shipbuilders ended 3.5% lower on Friday at ₹3,179. The stock has risen nearly 300% in the last 12 months.