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Business News/ Markets / Stock Markets/  Cochin Shipyard shares climb 10% to touch new all-time high as net profit soars multifold in Q4
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Cochin Shipyard shares climb 10% to touch new all-time high as net profit soars multifold in Q4

Cochin Shipyard shares surged 10% to reach a new high of ₹2100 after reporting a 558% YoY increase in net profit for Q4. Over the last 10 sessions, the company shares have jumped 68%. This momentum has propelled the shares to a remarkable 725% gain over the past year.

Earlier this month, the company bagged an order from a European client for the design and construction of a hybrid service operation vessel (SOV) with an option for two more such vessels. (Bloomberg)Premium
Earlier this month, the company bagged an order from a European client for the design and construction of a hybrid service operation vessel (SOV) with an option for two more such vessels. (Bloomberg)

Shares of Cochin Shipyard, a prominent shipbuilding and repair yard in India, continued their upward trajectory for the third consecutive trading session on Monday, surging another 10% to achieve a new all-time high of 2100 per share. This surge follows the company's robust performance in Q4 and for the full fiscal year (FY24).

Following the post-market hours announcement on Friday, the company reported a remarkable 558% year-on-year increase in its consolidated net profit, reaching 258.88 crore. Revenue from operations for the reporting quarter soared to 1366 crore, marking a significant improvement of 103% compared to 671 crore in the previous year.

For FY24, net profit escalated to 783 crore from 304 crore in FY23, while revenue from operations surged to 4140 crore from 2571 crore in FY23.

Also Read: Multibaggers: 3 shipbuilding stocks including Cochin Shipyard gained between 200% and 725% in a year

The company shares in recent sessions have gained steam following opinion polls indicating that the BJP is expected to form the government for the third term with a majority of seats. Consequently, the market anticipates continued capital expenditure towards defence.

"A strong BJP mandate would imply an increased focus on infrastructure spending that would be beneficial for infrastructure-linked sectors such as industrials, capital goods, utilities, defence, cement, and real estate," said global brokerage firm UBS in its latest note.

Over the last 10 sessions, the company shares have jumped 68%. This momentum has propelled the shares to a remarkable 725% gain over the past year and an impressive 1141% increase in just two years.

Recent developments

Earlier this month, the company bagged an order from a European client for the design and construction of a hybrid service operation vessel (SOV) with an option for two more such vessels. The vessel is equipped with hybrid battery systems to improve energy efficiency and reduce carbon footprints.

Also Read: Also Read: Defence modernization, indigenization programme to propel HAL

The vessel is designed and built for the service, maintenance, and operational needs of the offshore wind farm industry in the European market, where sustainable energy solutions are in high demand. The project is expected to be completed by the end of 2026, said Cochin Shipyards in its exchange filing.

The order has been categorised as 'large', falling within the 500-1000 crore range; however, the precise value of the deal was not revealed in the filing.

Outlook remains strong

The company, established on March 29, 1972, is a wholly-owned Government of India (GoI) enterprise. It was granted 'Miniratna' status in 2008 by the Department of Public Enterprises, GoI. Strategically situated along the west coast of India, its shipyard occupies a pivotal position on the primary sea route connecting Europe, West Asia, and the Pacific Rim, a significant international maritime thoroughfare.

Furthermore, the shipyard enjoys close proximity to the Kochi port and offshore oil fields on the western coast of India, as well as relative proximity to the Middle East.

Also Read: MTAR Technologies: Motilal Oswal initiates coverage with 'buy', sees 33% upside

According to ICICI Direct's March report, the Indian Navy's forthcoming warship procurement plans offer promising prospects for the company. Advanced discussions regarding another aircraft carrier also provide an additional order opportunity estimated at 40,000 crore. 

In the commercial segment, opportunities for electric vessels are emerging from Europe, with approximately 2,500 vessels slated for replacement with environmentally friendly alternatives. Additionally, the company anticipates substantial opportunities in the ship-repair segment, catering to both defence and commercial industries.

ICICI forecasts substantial year-on-year growth in both revenue and profitability for CSL from FY24 to FY26, primarily driven by increased execution rates in both segments and a rising contribution from the margin-enhancing ship repair segment. 

Also Read: Mazagon Dock: This defence PSU stock is trading 1900% above its IPO price

It anticipates a CAGR of approximately 23% for revenue and around 36% for profit after tax (PAT) over the period spanning FY23 to FY26. This forecast contrasts with the decline observed in the preceding period, from FY20 to FY23.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 27 May 2024, 10:18 AM IST
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