Cochin Shipyard stock surges to record high on robust Q4 results; PSU defence firm's shares skyrocket 700% in a year

Cochin Shipyard is engaged in shipbuilding and repair of ships/offshore rigs etc. The company is the largest public-sector shipyard in India, and derives major revenue from the Navy.

Shares of Cochin Shipyard jumped nearly 10 percent to hit a new high of Rs 2,100 on the National Stock Exchange (NSE) on the back of robust March quarter (Q4FY24) earnings.

The state-run defence company reported a near seven-fold year-on-year jump in net profit at Rs 258.90 crore while its revenue increased by 114.3 percent YoY to Rs 1,286 crore, led by strong execution in both segments.

Cochin Shipyard is engaged in shipbuilding and repair of ships/offshore rigs etc. The company is the largest public-sector shipyard in India, and derives major revenue from the Navy. Its primary revenue streams include naval vessel construction, Coast Guard projects, commercial shipbuilding, and vessel repair services.

At 10:16 am, Cochin Shipyard shares were trading 4.4 percent higher at Rs 1,991.80 on NSE. In the past 10 trading days, the stock has zoomed 76 percent, massively outpacing benchmark Nifty 50.

In the 12 months gone by, the multibagger stock has delivered astronomical returns of over 700 percent. So far this year, the stock has nearly tripled investors money as it skyrocketed 192 percent.

Earlier this year, Cochin Shipyard stock was rated 'buy' by ICICI Direct Research, with a target price of Rs 1,055 which the counter has far surpassed.

The brokerage's investment justification was based on the company's outstanding skills in shipbuilding and ship repair, and the execution of picking up a sizable order backlog to spur growth; and the durability of the order inflow possibility.

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 110,000 deadweight tonnage (DWT) in shipbuilding and up to 125,000 DWT in ship repair.

The company's capabilities have been 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 Rs 22,300 crore as of December 23, there is good revenue growth outlook, the brokerage said. It also emphasised that there is still a robust order pipeline in the commercial and defence shipbuilding and ship repair industries, including exports.

Within the defence industry, analysts at ICICI Direct feel that Cochin Shipyard has a great future ahead of it with the India Navy's planned vessel acquisition.

Also Read | Cochin Shipyard Q4 net profit soars to Rs 259 crore

“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 percent and roughly 36 percent CAGR, respectively, over FY23–26E," ICICI Direct Research said.