Cochin Shipyard shares rose 319% in a year: Valuation, technicals, price target and more

Multibagger stock: Shares of Cochin Shipyard, which ended at Rs 208.1 on March 28 last year, closed at Rs 871.75 in the previous session.

Multibagger defence stock Cochin Shipyard Ltd has delivered 319% returns in a year. Shares of Cochin Shipyard, which ended at Rs 208.1 on March 28 last year closed at Rs 871.75 in the previous session. However, the stock has corrected nearly 8% from its record high of Rs 944.65 touched on January 31 this year.

In terms of valuations, the stock has a PE ratio of 40.68 against the sector PE of 41.26. It price to earnings growth ratio stands at 9.2.

The price to book ratio of Cochin Shipyard stands at 2.61. The stock has seen very low volatility with its beta at 0.3 in a year

In terms of technicals, the relative strength index (RSI) of the stock stands at 52.1, signaling the stock is neither overbought nor oversold on technical charts. Cochin Shipyard shares are trading higher than the 20 day, 50 day, 100 day, 200 day but lower than the 5 day and 10 day moving averages.

The stock closed 0.29% lower at Rs 871.75 on Thursday when the equity market witnessed a strong rally.

Nifty rose 203 points to 22,326 and Sensex ended 655 points higher at 73,651 on the last trading day of FY24.

Market cap of the defence stock fell to Rs 22,934 crore.

Cochin Shipyard stock opened higher at Rs 882 in the previous session on BSE. Total 0.98 lakh shares of the firm changed hands amounting to a turnover of Rs 8.58 crore on BSE. The stock has delivered multibagger returns of 491% in two years and risen 391% in three years.

Brokerage ICICI Direct is bullish on the stock with a target price of Rs 1,055. The brokerage’s cited following reasons behind its stance: The company’s outstanding skills in shipbuilding and ship repair; the execution of picking up a sizable order backlog to spur growth; and the durability of the order inflow possibility.

The brokerage said Cochin Shipyard was skilled at carrying out a variety of projects in both these sectors thanks to its cutting-edge, state-of-the-art infrastructure, which has a capacity of up to 110000 DWT in shipbuilding and up to 125000 DWT in ship repair. The company’s capabilities have greatly enhanced with the commissioning of the International Ship Repair Facility (ISRF) and a new dry dock facility. With a pick-up in execution and an order backlog of over Rs 22,300 crore as of December 23, there is good revenue growth outlook.

“Over FY24–26E, we expect that Cochin Shipyard will see notable YoY growth in revenues and profitability, driven by a pick-up in execution in both categories and an increase in the share of the margin-accretive ship-repair segment. In contrast to the de-growth seen over FY20–23, we project revenue and profit after tax (PAT) to expand at around 23% and roughly 36% CAGR, respectively, over FY23–26E,” ICICI Direct Research said in its report.

“Valuations look attractive considering the multiple growth drivers. We value Cochin Shipyard at Rs 1,055 i.e. 36x FY26E P/E,” said the brokerage.

The shipbuilding company posted a 121.4% increase in consolidated net profit at Rs 244.4 crore for the third quarter of FY24. Revenue from operations rose 64.6 percent year-on-year to Rs 1,056.4 crore during the quarter.

The firm also declared 2nd interim dividend of Rs 3.50 per equity share of Rs. 5/- each fully paid-up (70%) for the financial year 2023-24.

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