Kotak Securities is bullish on Cochin Shipyard has recommended buy rating on the stock with a target price of Rs 520 in its research report dated October 17, 2018.
Kotak Securities' research report on Cochin Shipyard
Cochin Shipyard has announced a buyback of 3.23% of its equity or 4.4 mn shares at a price of 455 per share aggregating Rs 2 bn. We believe that this buyback was to support the disinvestment programme of the government and does not change the fundamentals of the company. However, unfavorable domestic macro environment, lack of fresh order inflow especially from the government and weaker global equity sentiment compel us to cut earnings by 1 to 7% for FY19 and FY20 and also lower the target multiple for Cosh. Maintain BUY with a lower TP of Rs 520 at 16x FY20E (from Rs 610 at 18x)
However, high bureaucracy/slowness in awarding defense orders from the government, continued weakness in the commercial shipbuilding space, higher commodity prices, INR depreciation, weaker domestic macros and low appetite for PSU stocks compel us to cut earnings by 1 to 7% and lower the multiple for Cosh from 18x to 16x on FY20 earnings. Maintain BUY rating with a revised TP of Rs 520 (from Rs 610).
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