Shares of Cochin Shipyard Ltd are set for a 39% correction from the current levels, said Kotak Institutional Equities citing lack of major defence orders in the last two years. Assigning a sell call to the defence sector stock, the brokerage raised its price target to Rs 830 from the earlier Rs 800. This stance of the brokerage comes after the defence major announced its Q3 earnings last week. The brokerage said Cochin Shipyard's order inflow was primarily driven by small-sized commercial shipping and ship repair orders. It expects near-term pipeline to remain muted at Rs 7,800 crore. The medium-term pipeline has also been lowered to Rs 30,000 crore (from Rs 50,000 crore).
In the current session, Cochin Shipyard stock was trading 0.83% higher at Rs 1372.20 on BSE. Cochin Shipyard’s market cap stood at Rs 36,099 crore. Total 1.13 lakh shares of the firm changed hands amounting to a turnover of Rs 15.47 crore in the afternoon session on BSE.
The multibagger stock has risen 54% in a year. In two years, the stock has risen 469.56%. The stock is trading neither in the oversold nor in the overbought zone, indicates its relative strength index (RSI) at 39.3.
The stock is amid a major bearish trend as it is trading lower than the 5 day, 10 day 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.
"A potential partnership to make jack-up rigs, a ship repair facility in Kandla and tie-ups with Korean firms to execute their orders are some initiatives CSL is currently exploring. We revise our FY2025-27E estimates by 13%/3%/(-)7% and FV to Rs 830 We revise our FY2025-27E estimates by 13%/3%/(-)7%, as we increase near-term margin estimates due to the INS Vikramadtiya ship repair order. We raise our Fair Value to Rs 830 from Rs 800, as we roll forward to March 2027. Multiple large defence order wins remain a key risk to our thesis," said Kotak Equities.
Net profit in Q3 declined 27.6% to Rs 177 crore in the last quarter against Rs 244 crore profit in the corresponding quarter of the previous fiscal. Revenue climbed 8.6% to Rs 1147.6 crore in Q3 against Rs 1056.4 crore in the corresponding quarter of the previous fiscal. Cochin Shipyard's EBITDA slipped 23.4% to Rs 237.4 crore in Q3 against Rs 310.1 crore in the corresponding quarter of the previous fiscal.
The board of directors declared a second interim dividend of Rs 3.50 per equity share of face value of Rs 5 each for the financial year ending March 31, 2025. This is in addition to the interim dividend of Rs 4, which was recommended by the board on November 7 last year.
Cochin Shipyard Limited is engaged in the shipbuilding and ship repair business. The company is engaged in the construction of vessels and repairs and refits of all types of vessels including upgradation of ships periodical layup repairs and life extension of ships.