Cochin Shipyard soars 8% on turning ex-split; up 148% in 6 months

The company had fixed January 10 as the Record Date for the proposed 2:1 stock split.

Shares of Cochin Shipyard hit a new high of Rs 722.90, as they rallied 8 per cent on the BSE in Wednesday’s intra-day trade in an otherwise subdued market. The stock turned ex-date for the sub division of equity shares in the ratio of 2:1.

In past six months, the stock has zoomed 148 per cent, as compared to a 9 per cent rise in the S&P BSE Sensex.

At 09:59 AM; Cochin Shipyard was trading 5 per cent higher at Rs 702.15, as compared to 0.06 per cent decline in the S&P BSE Sensex. A combined nearly 4.6 million changed hands on the NSE and BSE.

Cochin Shipyard had fixed January 10, 2024 as the Record Date for the purpose of determining the eligibility of shareholders for sub-division/split of existing 1 equity share of face value of Rs 10 each into 2 equity shares of face value of Rs 5 each.

The rationale behind the stock split is to comply with Department of Investment and Public Asset Management (DIPAM) Guidelines on Capital Restructuring; to encourage wider participation of small investors; and to enhance liquidity of the Equity Shares of the Company in the stock market.

Cochin Shipyard is engaged in two major activities viz., shipbuilding and repair of ships/offshore rigs etc. The company is the largest public-sector shipyard in India, and derives major revenue from the Navy. The primary revenue streams include naval vessel construction, coast guard projects, commercial shipbuilding, and vessel repair services.

Vision 2030 envisaged action plan to make India one of the top 10 shipbuilding nations in the world needs further build up towards initiatives such as channelizing the cargo to improve demand, improving the ecosystem for ancillary industries, generate standardised designs for better productivity, Governmental interventions to create level playing fields to make the industry competitive in International arena etc.

The proposed creation of a Maritime Development Fund to provide easy access to working capital and long-term finance needs across marine sectors is yet to be implemented which otherwise can give access to Indian ship owners to improve their capacity and shipyards to improve the infrastructure, Cochin Shipyard had said in its FY23 annual report.

Order pipeline remains strong in defence and commercial ship-building and ship-repair segments including exports. About Rs 13,000 crore worth of ship-building contracts are in pipeline; tenders are expected to be floated in the medium term. Apart from these, Rs 84,000 crore worth of orders are in the Request for Proposal (RFP) stage as per the management.

In the defence segment, analysts at ICICI Securities believe that India Navy’s future plan of warships procurement presents strong prospects for Cochin Shipyard. Discussions on another aircraft carrier are also in advanced stages and offer additional order opportunities of Rs 40,000 crore.

In the commercial segment, electric vessels opportunity emerges from Europe as 2500 vessels are scheduled to be replaced with green vessels. In the ship-repair segment too, the company sees sizable opportunities in both defence & commercial industries, the brokerage firm said. The stock however, trading above its target price of Rs 670 per share.