Cochin Shipyard Stock Booms 9X In 1 Year: Key Reasons Behind

Cochin Shipyard stock rally

Have you heard about Cochin Shipyard? If you haven’t been following the stock market closely, you might be surprised to learn that Cochin Shipyard stock has skyrocketed 9 times in just one year.

Cochin Shipyard stock rally

Quite a feat, right? 

You must be wondering, what’s driving this stock rally? Let’s go through the details and uncover the factors behind this phenomenal growth. Also, we will discuss analysts’ opinions and investor’s perspectives.

Stay tuned!

(A) Key Reasons Behind Cochin Shipyard Stock Rally

Here are some of the major reasons that contributed to the boom of Cochin Shipyard stock-

(A.1) Impressive Q4 Performance

First and foremost, the strong Q4 results of Cochin Shipyard have played a major role. The numbers speak for themselves. The company posted a whopping 558.8% year-on-year (YoY) jump in its net profit, reaching Rs.2.6 billion. Compare that to the Rs.393 million net profit in the same quarter last year. 

Impressive, isn’t it?

And it doesn’t stop there. The revenue for this quarter shot up by 114.3% to Rs.12.9 billion, compared to Rs.6 billion in the previous fiscal year’s corresponding period. The operating profit saw a dramatic turnaround as well, jumping to Rs.2.9 billion from a loss of Rs 671 million the year before. 

That’s what you call a comeback!

The shipbuilding segment alone earned almost Rs.10 billion, more than doubling the Rs.4.5 billion from the previous year. For the full fiscal year ending in March 2024, the company’s net profit more than doubled to Rs.7.9 billion from Rs.3 billion in FY23. 

And, guess what? 

The company’s board recommended a final dividend of Rs.2.25 per equity share, adding to the good news for investors.

(A.2) Positive Sector Trends

International Shipways

You might be thinking, “What else is driving this boom?” Well, it’s not just Cochin Shipyard’s performance. The entire sector is on an upswing. Better-than-expected results from International Seaways have created positive momentum for Cochin Shipyard and other related stocks.

International Seaways, a significant player in the shipping industry, recently posted strong Q1 earnings and offered a positive outlook for the upcoming quarters. This kind of optimism often spills over into related markets. It’s like when Accenture announces something big; Indian IT companies feel the impact immediately.

International Seaways’ focus on strategic fleet management and capitalizing on favorable market conditions is reflected in Indian shipping stocks as well. Many Indian shipping companies, including Cochin Shipyard, are expanding capacities and adding new fleets, positioning themselves perfectly to take advantage of current market conditions.

(A.3) Impact of the Baltimore Bridge Incident

Baltimore bridge collapse

Now, here’s something you might not have expected – the collapse of the Baltimore Bridge in Maryland. This event has had a ripple effect on the shipping industry. Industry experts believe that this disruption will push freight charges upward, which is beneficial for shipping companies.

Replacing the bridge will take years, but in the meantime, authorities have opened a temporary channel to allow some vessels to move around the stuck container vessel. This disruption has led to increased demand and higher prices for shipping services, further boosting Cochin Shipyard’s prospects.

(A.4) Noteworthy Recent Developments

But that’s not all. Cochin Shipyard has been making headlines with several significant developments recently. Just this month, they bagged an order from a European client for the design and construction of a hybrid service operation vessel (SOV). This vessel, equipped with hybrid battery systems to improve energy efficiency and reduce carbon footprints, is designed for the offshore wind farm industry in Europe. Sustainable energy solutions are in high demand in this market, and Cochin Shipyard is tapping into this trend.

The order is categorized as ‘large,’ falling within the Rs.500-1000 crore range. Although the exact value wasn’t revealed, it’s a significant deal that will be completed by the end of 2026. This development is a testament to Cochin Shipyard’s growing reputation and capabilities in the global market.

(A.5) Promising Future Prospects

Indian Navy

Looking ahead, the future appears even brighter for Cochin Shipyard. According to ICICI Direct’s March report, the Indian Navy’s forthcoming warship procurement plans offer promising prospects for the company. Advanced discussions regarding another aircraft carrier present an additional order opportunity estimated at Rs.40,000 crore. 

That’s huge!

In the commercial segment, opportunities for electric vessels are emerging from Europe. Approximately 2,500 vessels are slated for replacement with environmentally friendly alternatives. This shift towards sustainability is creating substantial opportunities for Cochin Shipyard in the ship-repair segment, catering to both defense and commercial industries.

ICICI forecasts substantial year-on-year growth in both revenue and profitability for Cochin Shipyard from FY24 to FY26. This growth is primarily driven by increased execution rates in both segments and a rising contribution from the margin-enhancing ship repair segment. They anticipate a compound annual growth rate (CAGR) of approximately 23% for revenue and around 36% for profit after tax (PAT) over this period. This is in stark contrast to the decline observed from FY20 to FY23.

If you’ve been following this stock or considering investing, now you know the key reasons behind its phenomenal growth. Isn’t it fascinating how various elements come together to drive such impressive market movements? Keep an eye on Cochin Shipyard – it seems like this ship is set to sail even further!

Note: Since last month, there have been numerous rallies in the Indian stock market. Some of the famous ones are-

(B) Analysts’ Opinions on Cochin Shipyard

Expert analyst's opinion

Cochin Shipyard has been a hot topic among analysts, with its stock demonstrating remarkable growth and strong technical indicators. Let’s dive into the insights provided by different analysts to understand what’s driving their positive outlook on this stock-

(B.1) Kushal Gandhi, Technical Analyst at StoxBox

Kushal Gandhi highlights a significant surge in Cochin Shipyard’s stock price since a bullish breakout in August last year. The stock has risen by 747% during this period while trading in a volatility contraction pattern. This pattern indicates a strengthening of the primary trend and momentum, suggesting an accumulation phase within the parabolic uptrend.

Compared to its peers and the overall market, Cochin Shipyard displays strong earnings per share (EPS), price strength, and buyer demand. 

Interestingly, the stock surged nearly 30% in the last three trading sessions while maintaining lower volatility levels, reducing the likelihood of sudden, erratic movements. Gandhi recommends buying Cochin Shipyard with a buy range of Rs.2785-2715 and a target of Rs.3203, along with a protective stop at Rs.2562.

(B.2) Jigar S Patel, Manager at Anand Rathi

Jigar S Patel provides a concise outlook, identifying support at Rs 2650 and resistance at Rs.2925. A decisive close above the Rs.2925 level could trigger further upside to Rs 3100. For the short term, the expected trading range is between Rs.2600 and Rs.3200.

(C) What Should Investors Do with Cochin Shipyard Stock?

Investors perspective on Cochin Shipyard stock

Given the recent performance and strong outlook for Cochin Shipyard, you might be wondering whether to sell, buy, or hold the stock. Let’s break it down based on the analysts’ insights-

(C.1) Buy for Long-Term Gains

Many analysts are bullish on Cochin Shipyard, highlighting its impressive growth, strong technical indicators, and favorable market conditions. Kushal Gandhi from StoxBox and Mandar Bhojane from Choice Broking both recommend buying. Gandhi suggests a buy range of Rs.2785-2715 with a target of Rs.3203, while Bhojane foresees potential growth up to Rs.3750 in the near term. If you’re looking for long-term gains, buying on dips around Rs.2500 and holding for the potential upside could be a smart move.

(C.2) Hold for Ongoing Strength

If you already own Cochin Shipyard stock, holding onto it might be the best course of action. Shiju Koothupalakkal from Prabhudas Lilladher notes the stock’s strong bull run and anticipates further upward movement with targets of Rs.3030 and Rs.3220. The stock is exhibiting a pattern of higher lows and higher highs, indicating ongoing strength. Holding your position could allow you to capitalize on this momentum.

(C.3) Consider Selling with a Strategy

While the overall outlook is positive, it’s wise to have a strategy in place. Jigar S Patel from Anand Rathi identifies a resistance level at Rs.2925. If the stock decisively closes above this level, it could trigger a further upside to Rs.3100. 

However, setting a protective stop-loss of around Rs.2300, as advised by Bhojane, can help manage risk in case of market reversals. If you’re concerned about potential volatility, consider selling portions of your holdings at target levels to lock in profits.

(D) Final Words

Ultimately, your decision should align with your investment goals and risk tolerance. The current consensus suggests buying or holding Cochin Shipyard stock for its strong growth prospects, but always keep an eye on market trends and set protective measures to safeguard your investments.

Thanks for reading 🙂 Don’t forget to share your thoughts in the comment section below!

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Published By: Supti Nandi
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