Rs 807 to Rs 2,474: This defence stock turned into a multibagger in three months; hit record high today

Shares of Garden Reach Shipbuilders have tripled investors’ wealth in the last three months. The multibagger stock, which closed at Rs 807.3 on April 1 this year hit a record high of Rs 2,474 during the current session, rising 206% during the period. With today’s rally, the PSU stock has hit its record high for the second straight session. Garden Reach Shipbuilders stock gained 7.2% to a high of Rs 2340 on BSE today. Market cap of the defence firm rose to Rs 27,695 crore in the current session. Positive sentiment in the stock came after the defence firm inked a Rs 170 crore contract with the Ministry of Defence, Bangladesh on July 1.

Garden Reach Shipbuilders stock has risen 318% in a year. The multibagger defence stock has zoomed 989% in two years. Shares of the warship building company saw the highest turnover of Rs 95.31 crore as 1.42 lakh shares changed hands on BSE today.

In terms of technicals, the relative strength index (RSI) of the stock stands at 78.9, signaling it's trading in the overbought zone. It also signals that there are more buyers than sellers for the stock in the current session.

Garden Reach shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day and 100 day moving averages.

Garden Reach stock fell to a 52 week low of Rs 558.60 on July 4, 2023. It has a high beta of 1.1%, indicating high volatility in a year.

Technical analysts are mostly bullish on the outlook of the stock.

Manoj Dalmia, CEO, Proficient Equities said, “With this move, the company's market capitalization has surpassed Rs 25,000 crore. Since the beginning of 2024, its market capitalization has increased by more than 2.5 times, starting from Rs 10,000 crore. In my capacity as an investor, I have faith in the stock's steady performance and future growth because of its recent strategic contract wins and solid operational capabilities. The price target is around Rs 4000 in near future.”

Shiju Koothupalakkal - Technical Research Analyst at Prabhudas Lilladher said, “The stock has witnessed a strong rally in the last one month gaining almost 100% making new highs and currently also has picked up well with a strong bullish candle formation to move past the resistance zone of Rs 2170 level to anticipate for fresh targets of Rs 2520 and Rs 2755 levels in the coming days. The levels near Rs 2000 would be the near-term support below which the bias would turn little bit weak. Currently, with the overall bias maintained strong, and with series of higher lows formation pattern visible, we can anticipate further rise in the coming days.”

Jigar S Patel at Anand Rathi said, "Support will be at Rs 2175 and resistance at Rs 2300. A decisive close above the Rs 2300 level may trigger a further upside to Rs 2450. The expected trading range will be between Rs 2000 and Rs 2500 for a month."

Aditya Agarwal, Head Derivatives & Technical at Sanctum Wealth said, "Garden Reach has seen a sharp upmove in last few days and has rallied by more than 170% since start of this year. Our long-term view remains bullish on the stock; however, given the sharp surge in stock prices in short span of time buying at current levels is not advisable. Any profit booking in Garden Reach towards Rs 2140/ Rs 1960 can be used to initiate fresh long positions for upside targets of Rs 2760."

Mandar Bhojane, Equity Research Analyst at Choice Broking said, “The defence stock is currently trading at Rs 2309, showcasing a notable 10% surge on July 1, 2024, reaching an all-time high. This upward momentum is supported by a consistent pattern of higher highs and higher lows on the daily chart, accompanied by robust trading volume. These patterns underscore a strong upward trajectory in the stock.

Garden Reach Shipbuilders & Engineers is a warship building company. The company is under the administrative control of the Ministry of Defence, primarily catering to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard.