Cochin Shipyard sinks 5% after Govt plans to sell stake worth Rs 2,026 cr

Cochin Shipyard shares fall: Shares of Cochin Shipyard fell as much as 4.90 per cent at Rs 1,590 per share on the BSE in Wednesday’s intraday day trade. This came after the company in an exchange filing said that the Indian government is set to divest approximately 5 per cent of its stake in Cochin Shipyard through an offer for sale (OFS), priced at Rs 1,540 per share.  

This represents a 7.8 per cent discount to the previous day's closing price. The total value of the stake is estimated to be around Rs 2,026 crore The offer includes a base sale of 2.5 per cent, with an option to sell an additional 2.5 per cent.

“Government of India, proposes to sell up to 65,77,020 equity shares of the company, representing 2.50 per cent stake as a ‘Base Offer’ on October 16, 2024, for non-retail investors only and on October 17, 2024 for retail investors, with an option to additionally sell 65,77,020 equity shares (representing 2.50 per cent stake) ad the ‘Oversubscription Option’ through a separate, designated window of the Stock Exchanges, collectively representing 5.00 per cent of the total issued and paid up equity share capital of the company,” the public sector undertaking said in an exchange filing.

Non-retail investors can participate in the sale starting October 16, with retail investors following on October 17. The government held a 72.86 per cent stake in Cochin Shipyard as of June 30.  

To date, the government has generated Rs 31.61 billion from divestments this fiscal year, though it has not set a specific divestment target for the year, according to reports.

Cochin Shipyard, a Schedule B Miniratna Public Sector Undertaking (PSU) under the Ministry of Shipping, was established in March 1972 as a fully owned entity of the Government of India. As of March 31, 2023, the government holds a 72.86% stake in the company. CSL specialises in the construction, repair, and refitting of various types of vessels, including ship upgrades, periodic lay-up repairs, and life extension services for ships.

Cochin Shipyard share price history

Cochin Shipyard stock has outperformed the market year to date as it has gained 138.4 per cent, while soaring 206.9 per cent in the last one year. In comparison BSE Sensex has risen 13.3 per cent year to date and 23.7 per cent in a year. 

The company has a total market capitalisation of Rs 42,646.71 crore. Its shares are trading at a price to earnings multiple of 49.73 times and at an earning per share of Rs 33.62.

At 09:57 AM, the stock price of the company was down by 2.99 per cent at Rs 1622 a piece on the BSE. By comparison, the BSE Sensex was up 0.11 per cent at 81,908.12 level.