This shipbuilding stock has zoomed 76% in 10 days; at new high post Q4 nos

Cochin Shipyard stock update: The stock hit a new high after the company reported a near 7-fold jump in net profit in Q4FY23 backed by a 114 per cent surge in revenue.

Shares of Cochin Shipyard hit a new high of Rs 2,100, as they rallied 10 per cent on the BSE in Monday's intra-day trade on the back of robust March quarter (Q4FY24) earnings. The company on Friday reported a near seven-fold jump in net profit at Rs 258.90 crore as against Rs 39.3 crore in Q4FY23. The state-owned shipbuilding firm had posted a PAT of Rs 244.38 crore in the previous quarter (Q3FY24).

In the past 10 trading days, Cochin Shipyard stock has zoomed 76 per cent. In the past six weeks, the stock has nearly doubled or skyrocketed 99 per cent from a level of Rs 1,056.90 on April 15. At 09:20 AM; Cochin Shipyard traded 7 per cent higher at Rs 2,044.10, as compared to 0.21 per cent rise in the S&P BSE Sensex.

In Q4FY24, Cochin Shipyard's revenue increased by 114.3 per cent year-on-year (YoY) to Rs 1286.0 crore, led by strong execution in both the segments. Ship-building revenue (77 per cent of total) increased by 117.1 per cent YoY to Rs 985.2 crore and ship-repair segment revenue (23 per cent of total) grew by 105.8 per cent YoY  to Rs 300.9 crore.

Earnings before interest, tax, depreciation, and amortisation (Ebitda) margin expanded sharply by 3359 bps YoY to 22.4 per cent (vs -11.2 per cent in Q4FY23), led by lower raw material cost and positive operating leverage.

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.

The emphasis of the Government on the coastal shipping/ inland waterways space as also in developing ship repair clusters in the country, all augurs well for the Company. With a strong order book, ensuing pipeline of major defense projects, enhanced interest coming in from the European segment, Cochin Shipyard's emerging innovative initiatives in the maritime space, various Memorandum of Understandings for ship repair, the management remains optimistic about the company's near term and long term future.

With 62 per cent YoY revenue growth for FY24, operational performance came significantly better than expectations. Execution in both the segments (shipbuilding and ship-repair) has improved significantly in the last 3 quarters on YoY basis after facing muted execution last year due to some design changes and supply chain issues in a few contracts. With positive operating leverage and better gross margins, EBITDA margin has also improved significantly, ICICI Securities said in a note.

Order backlog is estimated to be at ~Rs 22,000 crore (5.7x FY24 revenues), providing strong revenue growth visibility. Order pipeline remains robust across defense & commercial ships/vessels (domestic and exports) and ship-repair. Moreover, recent commissioning of ship-building and ship repair facilities have significantly augmented the company's capacity and overall capabilities, the brokerage firm said.