Stock of this state-owned defense company has zoomed over 150% since April

Shares of MIDHANI hit a record high of Rs 476.40, as they zoomed 17% on the BSE in Wednesday's intra-day trade and has recorded its sharpest intra-day rally since April 7, 2020.

Shares of Mishra Dhatu Nigam (MIDHANI) hit a record high of Rs 476.40, as they zoomed 17 per cent on the BSE in Wednesday’s intra-day trade amid heavy volumes on the back of strong business outlook. The stock surpassed its previous high of Rs 447.95 touched on September 12, 2023.

The stock of state-owned aerospace & defense company recorded its sharpest intra-day rally in past over three years. Earlier, on April 7, 2020, it had surged 17.16 per cent on the BSE, the exchange data shows. While, in March 27, 2020, it had rallied 20 per cent in intra-day trade.

The average trading volumes on the counter jumped over 10-fold today. A combined 10.1 million equity shares representing 5.4 per cent of total equity of MIDHANI had changed hands on the NSE and BSE till 12:12 PM. In comparison, the S&P BSE Sensex was up 0.63 per cent at 66,499.

Since April, thus far in the financial year, the stock price of MIDHANI has zoomed 159 per cent on expectations of strong earnings.

MIDHANI is the manufacturer of High performance alloys, special steels and stainless steels, super alloys (nickel base, iron base and cobalt base), varieties of titanium alloys etc.

Government initiatives, such as Atmanirbhar Bharat and import embargo on a number of defence items, should boost the manufacture of defence and other heavy equipment in India and thus benefit the company. The company also intends to cater to sectors, such as oil & gas, mining, power, and railways.

The global superalloys market was valued at $6.8 billion in 2021, and is projected to reach $15.1 billion by 2031, growing at a CAGR of 8.5 per cent from 2022 to 2031. The market for superalloy is expanding due to increased demand from the rising nations, caused by their increased need for electrical power. The surge in demand for industrial gas turbines, particularly for the oil and gas industry in developing countries like India, Brazil, China, and West Africa, is also anticipated to present the industry with major development prospects in the near future.

Indian Railways imports approx. 50,000 axles p.a. for its passenger coaches. MIDHANI’s supply of 400 Axles to Indian Railway during FY23 though a small step, would be a big leap in MIDHANI’s presence in Railway Sector as there are orders in pipeline from Indian Railways, the company said.

With focus on indigenization and strong capabilities backed by advanced & unique metallurgical facilities at Hyderabad & Rohtak, the company is well positioned to benefit substantially from increasing requirements of these strategic materials, according to analysts.

According to analysts at ICICI Securities, MIDHANI is set to benefit substantially from increasing capital outlay across its target segments – defence, space, railways, energy etc. With focus on improving execution, developing product portfolio and exports, the brokerage firm believes company’s operational and financial performance would improve considerably in the coming period. It estimates revenue and PAT to grow at ~20 per cent and ~18 per cent CAGR over FY23-25E. The stock, however, was trading above analysts target price of Rs 465 per share.