Cochin Shipyard surges 15%, hits new high in weak market on strong outlook

The stock hit a new high of Rs 1,096.85, and has zoomed 98 per cent in the past three months

Shares of Cochin Shipyard (CSL) hit a new high of Rs 1,096.85 as they surged 15 per cent on the BSE in Thursday's intra-day trade, in an otherwise weak market, on strong business outlook. In comparison, the S&P BSE Sensex was down 0.11 per cent at 65,807 at 09:58 AM. In the past three months, the stock of the state owned company has zoomed 98 per cent.

CSL 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.

The shipbuilding industry is dependent on the defence requirements and CSL concluded the largest ship building contract for the construction of six Next Generation Missile Vessels (NGMV) for the Indian Navy, thus adding good order book value to the company.

"The Government is focussed on improving the port and inland water infrastructure. This enhances the opportunity for the Indian yards to participate in this market with improved demands. The contract signed by the company to build the country's largest Trailer Suction Hopper Dredger (TSHD) of 12,000 cubic metres for Dredging Corporation of India (DCI) in partnership with the market leader IHC, Netherlands is a major milestone in this market and can bring more such projects in the future," CSL said in its FY23 annual report.

Hooghly Cochin Shipyard Limited (HCSL), the wholly owned subsidiary of the company in West Bengal, is fully operational and bagged orders in short sea/coastal and inland segment. The company is fully focussed and equipped to tap this potential segment, the company said.

The company with proven track record on building offshore support ships for oil and gas in the past gives a good advantage to seamlessly penetrate offshore wind segment market. With focussed attention, company managed to enter this high potential market by bagging a prestigious contract to build two high end Construction Support Operation Vessels (CSOV) with an option for four more such vessels from an European client.

Meanwhile, India Ratings and Research (Ind-Ra) expects CSL's order book to remain healthy and its revenue from operations to grow steadily in the near term, in the light of the company’s stable order book and strong capabilities to build and repair all types of vessels. CSL has built and repaired some of the largest ships in India, including aircraft carriers, cargo vessels and technology demonstration vessels.