In Wednesday’s intraday session, shares of Mishra Dhatu Nigam (Midhani) rose 7% to a new high of Rs 258.65 on the BSE after news broke that the business would collaborate with Boeing India to create raw materials for aerospace components.
The state-run aerospace and defence company’s shares rose above the previous record high of Rs 251.50, which was set on October 10, 2022. It has increased by 55% over the last three months compared to the S&P BSE Sensex’s 8% growth.
According to news agency PTI, Boeing India stated on Tuesday that it will evaluate Midhani and work with them to create raw materials for standardised aerospace parts and components in India.
According to Boeing, developing a self-sufficient aerospace and defence industry in India depends on the local availability of specialised aerospace materials and alloys. According to the report, which quoted a Boeing press release, the first stage in ensuring the supply chain and aligning with the NDA government’s goal of Aatmanirbhar Bharat is the availability of crucial aerospace materials.
Manufacturing of superalloys, titanium, special purpose steel, and other unique metals is a business activity for Midhani.
In the next five to six years, the government is anticipated to spend close to Rs 10 trillion ($130 billion) on military modernization. According to Midhani’s FY22 annual report, the Defence Acquisition Policy (DAP) 2020 places a strong emphasis on >50% indigenous content for the majority of the procurement categories.
The need for locally produced content in platforms and systems is anticipated to convert into a demand for locally produced raw materials, which will support the growth of Indian metals and alloys producers. The company stated that in order to achieve economies of scale, the demand in related industries such as aerospace manufacturing, space, electric vehicles, and trains will be tapped.
Midhani consistently receives orders from the aerospace, defence, power, electronics, telecommunications, engineering, and other industries. Its order inflow for Q1 FY23 was around Rs 160 crore, and the order booking position for FY23 (as of this writing) is approximately Rs 470 crore.
As of today, Midhani has open orders worth roughly Rs 1,535 crore. Additionally, the business has a contract with the Indian Air Force to develop and indigenously produce a variety of metal powders, including titanium alloys, aluminium alloys, and special steel, for use in the additive manufacturing method used to create aviation components.
Bulletproof jackets may soon be ordered by the business. As of June 30, 2022, its order book was estimated to be worth roughly Rs 1,360 crore, of which 48% were for defence (including sales to PSUs), 37% were for space, and the remainder were for other uses, according to a research by HDFC Securities.
The brokerage has a favourable perspective on the stock and has assigned a bull case fair value of Rs 260.50 to it, taking into account the company’s solid financial profile, which is characterised by good profitability levels and return indicators as well as a comfortable capital structure.
bias in technical view: Supporting positively: Rs 245
Targets: 266 and 277 rupees.
Since the middle of August, the stock has been trading with an upward tilt and has increased by as much as 52% during the past two months. After touching the upper end of the Bollinger Band on the daily chart twice during the run, the stock corrected.
On the daily chart, the stock can be seen testing the upper-end of the Bollinger Band once more. As a result, it appears probable that the stock might make an interim corrective move between Rs 225-Rs 230 if it is unable to sustain above Rs 253.
With immediate support at Rs. 245, the trend is very bullish on the weekly chart. The next key resistance levels for the stock are set at Rs. 266 and Rs. 277 above Rs. 258 levels, according to the yearly Fibonacci chart.