Why Cochin Shipyard Share Price is Rising

Mazagon Dock Shipbuilders up over 32%.

Garden Reach Shipbuilders with 42% gains.

While Shipping Corporation of India a little behind with 11% gains.

Such has been the sentiment in shipping stocks for the past couple of trading session.

Each company involved in the shipping or related ship-building business has seen a sharp uptick in the month gone by.

For instance, stocks involved in the tanker business have also shot up.

Companies including Chowgule Steamships and Seamec are trading near their 52-week high.

Among all this, one outlier stock that has stood out is Cochin Shipyard.

You can't expect a big stock to double within a matter of days... but Cochin Shipyard has defied odds and rallied almost 50% in less than a month.

In the past 10 days, the stock has rallied over 75%!

The way it's moving up, (the stock is up another 5% today), it appears the momentum isn't going to stop anytime soon.

Let's find out why Cochin Shipyard shares are rising and what lies ahead.

#1 Strong Q4 Results

The primary reason behind the recent uptick could be attributed to strong Q4 numbers posted by the defence shipbuilder.

State-owned Cochin Shipyard last week reported a 558.8% year-on-year (YoY) jump in its net profit to Rs 2.6 billion (bn).

In the corresponding quarter, Cochin Shipyard had posted a net profit of Rs 393 million (m).

The company's revenue shot up 114.3% to Rs 12.9 bn against Rs 6 bn in the corresponding period of the preceding fiscal.

Operating profit jumped to Rs 2.9 bn over a loss of Rs 671 m in the corresponding period last year.

During the quarter, Cochin Shipyard earned almost Rs 10 bn from the shipbuilding segment compared to Rs 4.5 bn last year.

For the full year ended March 2024, the company's net profit more than doubled to Rs 7.9 bn from Rs 3 bn in FY23.

Along with results, the company's board also recommended a final dividend of Rs 2.25 per equity share.

#2 Strong Sectoral Outlook

Apart from strong earnings, better than expected results by International Seaways is driving the momentum for Cochin Shipyard and other related stocks.

A couple of days ago, International Seaways posted strong Q1 earnings and provided a positive outlook for the coming quarters.

This has fuelled a sudden change in sentiment for Top Indian shipping stocks and provided a big boost.

This happens quite often to be honest... Indian stocks track the performance of global counterparts. Take for instance Accenture... whenever the IT major announces something big, it immediately has an impact on Indian IT companies.

In case of International Seaways, it remains focused on strategic fleet management and capitalizing on favorable market conditions. We could say the same for Indian shipping stocks... they're in a sweet spot as most of them have taken capacity expansions or are adding new fleets.

#3 Baltimore Bridge Collapse

Apart from the above, one other reason why shipping stocks are buzzing in trade is owing to the collapse of the Baltimore bridge in the state of Maryland.

According to industry experts, this disruption will push the freight charges upward, which will be beneficial for the shipping companies.

Replacing this bridge will likely take years, but authorities have opened a temporary channel to allow some vessels to move around the stuck container vessel.

What Next?

Cochin Shipyard is currently in a sweet spot as global brokerages have turned bullish on the company's defence capabilities.

Even though it is registered as a commercial shipyard, Cochin Shipyard derives most of its revenues from building and repairing defence ships.

It's not just a unique player to ride the potential in India's defence manufacturing space, but the company is towering strong performance in a challenging sector.

With a strong order book, Cochin Shipyard is emerging as a dominant force in the maritime space and ship repairs.

At present, it has an order backlog of close to Rs 200 bn which provides strong revenue visibility... the order book is almost 6x the company's FY24 revenue.

Financial Snapshot

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23	TTM (FY24)
Net Sales	29,656	34,225	28,189	31,909	23,646	36,450
Growth (%)	26%	15%	-18%	13%	-26%	54%
Operating Profit	7,971	9,565	9,136	8,899	4,688	8,750
OPM (%)	27%	28%	32%	28%	20%	24%
Net Profit	4,781	6,320	6,087	5,640	3,047	8,130
Net Margin (%)	16%	18%	22%	18%	13%	22%
ROE (%)	14.5	17.9	15.7	13.4	6.9	-
ROCE (%)	22.3	24.9	21.7	18.9	10.2	-
Dividend (Rs)	6.5	8.3	7.8	8.4	8.5	9.8
Debt to Equity (x)	0	0	0	0	0	0

Data Source: Ace Equity

The government's focus on the coastal shipping space and developing ship repair clusters also bodes well for Cochin Shipyard.

To highlight one of its big orders, the work received from a European client to design and build a Hybrid Service Operation Vessel (SOV) could be a game changer. The Rs 5-10 bn project is expected to be completed by the end of 2026.

Further, the ministry of defence has awarded a Rs 4.9 bn contract for maintenance work of equipment on INS Vikrant, expected to be completed by Q1FY25.

With India aiming to become Atmanirbhar Bharat, the government promoting indigenisation, and growing export orders, the Indian shipbuilding industry is likely to be the primary beneficiary, and Cochin Shipyard stands to benefit from it.

How Cochin Shipyard Share Price has Performed Recently

In the past 5 days, Cochin Shipyard share price has rallied over 37%.

From the low of Rs 1,195 touched on 13 May 2024, the stock price has shot up over 75%.

Cochin Shipyard has a 52-week high of Rs 2,100 touched on 27 May 2024 and a 52-week low of Rs 235 touched on 26 May 2023.

In the past 1 year, the stock is up over 700% while in 2024 so far, Cochin Shipyard is up 193%.

Here's a table comparing Cochin Shipyard with its peers -

Comparative Analysis

Company	Cochin Shipyard	Mazagon Dock	Knowledge Marine
ROE (%)	6.9	24.3	52.1
ROCE (%)	10.2	32.8	56.7
Latest EPS (Rs)	29.8	79.3	43.1
TTM PE (x)	64.2	40.1	29.6
TTM Price to book (x)	10.1	10.7	10.3
Dividend yield (%)	0.5	0.5	0
Industry PE	49.6
Industry PB	10.3

Data Source: Ace Equity

About Cochin Shipyard

Cochin Shipyard is India's first greenfield shipbuilding yard and the only shipyard with a shipbuilding capacity of 110 thousand deadweight tons (DWT) and a repairing capacity of 125 thousand DWT.

It has a wide product portfolio, including tankers, product carriers, bulk carriers, passenger vessels, and air defence ships, through which it serves its reputed clientele.

The company recently also developed India's first indigenous aircraft carrier, Vikrant.

Some of its clients are the Indian Navy, the Indian Coast Guard, the Shipping Corporation of India, and the National Petroleum Construction Company (Abu Dhabi).

For more details, see the Cochin Shipyard company fact sheet and quarterly results.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...