Cochin Shipyard: Defence PSU stock up 4% ahead of Q4 results; preview, target price

Shares of Cochin Shipyard Ltd were trading 4 per cent higher in Thursday's trade ahead of the defence PSU's March quarter results. The stock was up after the company issued a clarification on recent media reports that suggested talks were underway with HD Hyundai for a Rs 10,000-crore project.

Cochin Shipyard said it was evaluating strategic possibilities with multiple entities, which are at various stages. The defence PSU noted that the central and state governments are working with various stakeholders to promote shipbuilding and ship repair, in line with the Maritime India Vision (MIV) 2030 and Maritime Amrit Kaal Vision (MAKV) 2047. 

Having said that, "there is no material information" that requires disclosure to stock exchanges, Cochin Shipyard informed stock exchanges. Despite this, the Cochin Shipyard stock rose 4.44 per cent to hit a high of Rs 1,774.95 on BSE. 

Cochin Shipyard Q4 results preview
Kotak Institutional Equities said Cochin Shipyard should see a 39 per cent topline growth, driven by the execution of ASW Corvette and NGMV projects, and the ship repair segment. It sees Q4 sales at Rs 1,702 crore compared with Rs 1,226 crore YoY. The brokerage forecast Q4 profit at Rs 273.60 crore, up 4 per cent YoY over Rs 264.70 crore in the same quarter last year. Ebitda margins is seen at 21.8 per cent, driven by a higher contribution from ship repair. 

Cochin Shipyard target price
Antique Stock Broking noted that Cochin Shipyard's present order book stands at Rs 22,500 crore, which provides a revenue visibility of almost five years. 

"As compared to Mazagon Dock and GRSE, the company’s order pipeline is relatively muted due to the deferral of IAC-II order. As a result, the stock may underperform MDL and GRSE, given inferior revenue visibility. We maintain HOLD rating with a target of Rs 1,481. Upside risk to this call may be triggered if IAC-II receives an Acceptance of Necessity from the DAC," it said.

Antique Stock Broking said the stock price outlook for Cochin Shipyard is closely tied to the ordering of an aircraft carrier (IAC-II) on which there is lack of consensus over the urgency and size of the vessel, driving it to temper its stance on the stock.

The brokerage has 'Hold' rating and a target of Rs 1,481 on Cochin Shipyard.