Why Cochin Shipyard Share Price is Rising

Over the past one year, one sector that has given the multibagger return is defence stock.

Leading this charge are the Public Sector Undertaking (PSU) defence stocks, which have seized the spotlight. In recent weeks, the PSU defence stocks have harnessed an unstoppable momentum, consistently achieving double-digit gains.

Among these, Miniratna defence stock Cochin Shipyard stands tall. The stock gained 40% in three consecutive sessions, reaching its all-time high on Thursday.

Here's why the shares of this defence PSU have been on fire.

#1 Strong Q1 results

The rally in the stock can be attributed to solid Q1 earnings.

Leading shipbuilding and repair yards Cochin Shipyard on 11 August 2023 reported a 7.9% YoY rise in revenue to Rs 4.8 billion (bn) from Rs 4.4 bn a year back.

The company reported EBITDA (earnings before interest, tax, depreciation and amortisation) surged 152% to Rs 790 m for the June quarter. Meanwhile, margins during the quarter came in at 16.5%.

The numbers were boosted by other income and lower expenses. The net profit for the quarter more than doubled and surged 135% YoY to Rs 986.5 bn against Rs 420 bn in the corresponding quarter.

The ship repair segment's revenue saw 68.5% YoY growth, reaching Rs 1.5 bn. On the other hand, the shipbuilding segment's revenue remained flat at Rs 3.3 bn. The company's other income surged by 50% YoY to Rs 840 m.

On 31 July, the company, in a filing to the exchanges, upgraded from schedule B to schedule A CPSE by the government of India.

The upgradation to schedule A recognises the company's strong financial performance and operational efficiency and contribution to national security.

The upgradation of Cochin Shipyard to Schedule A will now help the company operate the larger senior management bandwidth required for effectively managing its seven units spread across the country.

India's first-ever indigenous aircraft carrier, INS Vikrant, was constructed by Cochin Shipyard. It was delivered in the last financial year portraying its capability to build complex defence vessels.

Going forward, Cochin Shipyard plans to launch three vessels by November 2023.

#2 Indigenous fleet support ships project approved

On 16 August 2023, the government finally cleared the long pending over Rs 190 bn project of indigenously building five advanced fleet support ships.

These specialised vessels are designed to provide essential logistical support to warships while they operate in the far seas. These vessels will be equipped to replenish warships with critical supplies such as fuel, water, ammunition, spares, and other essential stores.

By facilitating on-the-spot replenishment, these support ships will significantly enhance the operational range and sustainability of the naval fleet, allowing them to remain active for extended periods without the need for frequent returns to port.

Moreover, the project's execution is poised to drive higher revenues and further fortify the defence and shipbuilding sectors.

How Cochin Shipyard stock has performed

Cochin Shipyard shares have risen by more than 30% in the last month. Over the past six months, the company's shares are up by more than 75%.

The stock is up by more than 155% in the last year. The share touched its 52-week high of Rs 904.5 on 17 August 2023 and 52-week low of Rs 329.1 on 22 August 2022, respectively.

About Cochin Shipyard

Cochin Shipyard is a government-owned shipbuilding company. It builds and repairs the largest vessels in India. It's mainly engaged in the construction of vessels and repairs and refits of vessels, including the upgradation of ships, periodical lay-up repairs, and life extension of ships.

The company has built and repaired some of the largest ships in India. Over the years, it has successfully responded to fluctuations in the shipbuilding requirements of the markets.

It has evolved from building bulk carriers to smaller and more technically sophisticated vessels such as Platform Supply Vessel (PSV) and Anchor Handling Tug Supply Vessel (AHTS).

The company offers various products including tankers, dredgers, aircraft carriers, bulk carriers, passenger vessels, and air defense ships. It also trains personnel from graduate engineers to marine engineers.

To know more about company, check out the Cochin Shipyard company fact sheet and quarterly results on our website.

You can also compare Cochin Shipyard with its peers:

Cochin Shipyard vs Mazagon Dock Ship

Cochin Shipyard vs VMS Industries

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