Shares of Mazagon Dock Shipbuilders Ltd. rose by as much as 20% to ₹4,990 on Thursday, marking gains in seven of the last nine trading sessions. This surge follows the company's recent designation as a 'Navratna', which significantly boosted investor confidence. The market capitalisation of Mazagon Dock Shipbuilders crossed the ₹1 lakh crore milestone on July 4.

The Department of Public Enterprises approved the proposal to grant Navratna status in a letter dated June 25. The Union government awards Navratna status to public sector undertakings (PSUs) that possess Miniratna Category I status and consistently achieve outstanding performance ratings. This prestigious status permits a company to invest up to ₹1,000 crore or 15% of its net worth in a single project. Additionally, it allows the company to enter joint ventures, form alliances, and establish overseas subsidiaries.

Shares of Mazagon Dock Shipbuilders have more than doubled in 2024, posting gains of 115%. Over the past 12 months, the stock has surged by more than 280%. The company made its stock market debut in October 2020 with an IPO price of ₹145 per share. Since then, the stock has skyrocketed by over 3,300% in less than four years.

Mazagon Dock is a state-run shipbuilder with the Government of India holding a majority stake. As of the March quarter, the government owned 84.8% of the company, with its entire stake valued at over ₹85,000 crore. While domestic mutual funds do not have a significant stake in Mazagon Dock, the company has approximately 375,000 small or retail shareholders as of the March quarter.

According to Bloomberg data, three out of four analysts covering Mazagon have a 'buy' rating on the stock, while one recommends 'sell'. Despite the majority's positive outlook, the average 12-month analyst price target suggests a potential downside of 82%. This contrasting perspective indicates that while the recent surge is driven by the company's new status and past performance, analysts see the stock as potentially overvalued in the long term.

Mazagon Dock's remarkable performance and its newly acquired Navratna status highlight its strategic importance and robust operational capabilities. The ability to make substantial investments and form international partnerships positions Mazagon Dock for continued growth and expansion in the global shipbuilding industry.

In summary, Mazagon Dock Shipbuilders Ltd. experienced a significant stock surge of 20% to ₹4,990, driven by the recent approval of its Navratna status. This achievement propelled the company's market capitalisation past ₹1 lakh crore. The stock has more than doubled in 2024, with a remarkable rise of over 3,300% since its IPO debut in October 2020. The government's majority stake, coupled with a strong base of retail shareholders, underscores the company's robust market presence and potential for future growth. Despite some analysts' caution about potential overvaluation, Mazagon Dock's strategic advantages and new status bode well for its continued success in the shipbuilding sector.

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