Cochin Shipyard shares soar 298% in one year; can this upside momentum continue?
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In only a single year, Cochin Shipyard’s stock value has surged significantly. Trendlyne data indicates that in a single year, the share price of Cochin Shipyard increased by almost 298% from the last trading price of ₹902.45. Cochin Shipyard’s chief business is building new ships as well as repairing and refitting old ones. On Friday’s session, Cochin Shipyard share price ended 0.59% higher at ₹901.65 apiece on BSE. In the previous three months, Cochin Shipyard share price climbed by 39%, and in the last six months, it has jumped by almost 80%.
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Cochin Shipyard stock is rated ‘buy’ by domestic brokerage ICICI Direct Research, with a target price of ₹1,055. The brokerage’s investment justification is based on two elements: the company’s outstanding skills in shipbuilding and ship repair; the execution of picking up a sizable order backlog to spur growth; and the durability of the order inflow possibility.
“Valuations look attractive considering the multiple growth drivers. We value Cochin Shipyard at ₹1,055 i.e. 36x FY26E P/E,” said the brokerage.
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The brokerage noted in its analysis that Cochin Shipyard is skilled at carrying out a variety of projects in both these sectors thanks to its cutting-edge, state-of-the-art infrastructure, which has a capacity of up to 110000 DWT in shipbuilding and up to 125000 DWT in ship repair. The company’s capabilities have greatly enhanced with the commissioning of the International Ship Repair Facility (ISRF) and a new dry dock facility. With a pick-up in execution and an order backlog of over ₹22,300 crore as of December 23, there is good revenue growth outlook.
The brokerage also emphasised that there is still a robust order pipeline in the commercial and defence shipbuilding and ship repair industries, including exports. There are already contracts worth over ₹9,000 crore for the construction of ships, and tenders are anticipated to be released in the medium future. The management claims that contracts worth ₹84,000 crore are now in the request for proposals (RFP) stage. Within the defence industry, the brokerage feels that Cochin Shipyard has a great future ahead of it with the India Navy’s planned vessel acquisition.
“Over FY24–26E, we expect that Cochin Shipyard will see notable YoY growth in revenues and profitability, driven by a pick-up in execution in both categories and an increase in the share of the margin-accretive ship-repair segment. In contrast to the de-growth seen over FY20–23, we project revenue and profit after tax (PAT) to expand at around 23% and roughly 36% CAGR, respectively, over FY23–26E,” ICICI Direct Research said in its report.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 25 Mar 2024, 09:38 AM IST
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