This is some good news:
Cochin Shipyard Limited (CSL) has signed the Master
Shipyard Repair Agreement (MSRA) with United States Navy
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Cochin Shipyards -MF’s & FPI"s raise stake
During March quarter, Mutual funds ( 12 Funds) had a 2.13% stake in Cochin Shipyard, compared to the 1.87% stake in the December quarter (9 funds)
foreign portfolio investors (FPIs) have increased their stake in Cochin Shipyard to 5.23% in March, compared to 4.1% in December.
Retail shareholding in Cochin Shipyard has remained constant in March at 16.16% from 16.87% in December
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CSL gets new order from European client
CSL has bagged a large order from a European client for the design and construction of a Hybrid Service Operation Vessel (Hybrid SOV) with an option for two more such vessels, the company said in a statement.
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Cochin Shipyards Q4- Revenue Doubles and Net Profit Soars by nearly 7 times QoQ. declares dividend
Discl: Invested from lower level . Not a buy or sell recommendation !
What is the order book position as that is key concern.
If you see shipyards globally, they do not quote at more than 15-20 times earnings.
What is likely FY26 earnings in terms of EPS. That should determine if stock is overvalued.
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Hi can anybody explain what does RFI/MidStage Order Pipeline of ₹84,000cr means? How soon do these potential orders go from RFI to RFP? Will Cochin have to bid for these projects i.e. are there other players looking to grab these orders as well?
Thank you.
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Hardik
Order book as of Dec 2023 is Rs 21500 Crore
It is not only the order book which is important, it is the future earning potential for which market is giving high valuation-
(1) Atma Nirbhar Bharat- 100% future orders from Indian Navy, coast guard are coming to the 3 shipping companies namely Mazgaon , Garden reach , Cochin shipyards…
And as China is strengthening it’s Navy and we are 10 years behind China, our defence shipping companies seem to have a strong runaway for growth
(2)These shipping companies have signed master service contract with US Navy for repair and maintenance- india is surrounded by sea in its East and Western coasts and so alll kinds of ships have access where our shipping companies have Docks.
Cochin shipyards had already got orders from European clients.
(3) All of these companies are expanding and are also undertaking commercial business from Pvt shipping companies from india and abroad.
Every company is targeting exports business as well.
(4) Ship building , repair etc are labour intensive and India labour is cheap. So all advanced countries may be looking for India for outsourcing.
If you want quantification , I think screener data is updated up to Q3, 2024… you can get a flavour.
The recent article also gives an updated data for all 3 shipping companies
Discl; Invested in all the 3 shipping companies from lower level. May be biased. please do your own assessment before investing
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I am not sure , we will have to check up on this.
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I get it. Invested in some defence plays myself at lower levels. My point was not on orderbook but a broader point that on avergae shipyards/defence psu have significant issues on execution, and margins.
At CMP entire PSU defence pack is overvalued. One year back all these plays were at buy levels. Now not so much. We are fast approaching levels where to sell and invest in other sectors of economy would pay better results over next 1-2 years. Anyway just a point of discussion.
@itsnotraunaq [quote=“itsnotraunaq, post:118, topic:33814”]
Hi can anybody explain what does RFI/MidStage Order Pipeline of ₹84,000cr means? How soon do these potential orders go from RFI to RFP? Will Cochin have to bid for these projects i.e. are there other players looking to grab these orders as well?
[/quote]
RFI to RFP is a process of 1-3 years depending upon project importance/ JV and Licensing deals. While most do go thorugh, there is always a 10% project delay/ 5% drop due to changes in MOD planning.
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Hardik
I agree the PSU’s were not so good in execution & the financial performance used to be lumpy and order book used to be poor.and therefore always used to carry a low P/E even though they used give a very good dividend yield of 8-10%. However , things seem to be changing under Modi Govt.
Not only Most PSU’s have healthy order book , but potential order in pipeline seems to be strong , thanks to Atma nirbhar Bharat and the worsening geo political situations.
In many PSU’s , there were changes in management and post that the quantum and quality of execution are improving quarter after quarter. For example for cochin shipyards
Shri Sreejith K Narayanan assumed charge as the Director (Operations) sometimes in mid 2022. From a net profit of 47 crore in March quarter of 2023 , Look at net profit figures of last 4 quarters of 2024 sequentially …109, 191, 248, 265…and market has liked this sequential growth and yoy growth.
If the market seems to have Re-rated the stock from 10 P/e TTM in April 2023 to 61P/e TTM now… it is not without a reason. similar valuation logic is also applicable for HAL, BEL, Bharat dynamic , BEML, Midhani and so on. In fact ,there are a dozen of pvt sector Defence stocks are trading still much higher than the defence PSU’s.
If you ask me if it can maintain the same growth or appreciation in stock price, it may be or may not be. there are many if’s though 
If the order book soars further ( if india has to counter Chinese Navy ) and these companies expand capacities and there is continuance of Govt policy, and the companies are able to give these kind of market beating returns, the stock price may further rise…
However , if there is a policy break down with a different govt in power and govt shifts its focus from defence , then perhaps there many be a de-,rating of the stocks.
Having said that these kind of companies may or may not be able to give qoq sequential growth…cochin shipyards may be an exception .But we need to see yoy growth because ship building takes longer lead time .
As far as valuation is concerned, it is subjective. our views may vary from each other. At each price for every seller , there is a buyer and vice versa.No one is wrong here - every one does its own analysis before putting his money
only market and time could give us a lesson.
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Even today they got an order of 60 million Euros and has rallied a lot in last 2 months. Booked profits today. Expecting it not to rally further. But who knows ?
FOMO has gripped among in investors for this stock…
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Cochin Shipyards unveils its new mega dry dock
https://idrw.org/cochin-shipyard-unveils-progress-on-new-mega-dry-dock/
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All the three Defence Shipping stocks added 1 lakh crore to the market Cap in 2024 till date.
A brief analysis covering performance , order book position… it is not only the order book of shipping stocks, but Defence stocks in general have been under investor radar after Defence Minister Rajnath Singh set a target to generate military exports worth Rs 50,000 crore on an annual basis and vowed to fast-track initiatives under ‘Make in India’ for defence production. Therefore almost all defence stocks
WHy this script is 40% down? profit booking + too much run up in last 1 year
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True.
There can not be a situation where a stock goes only one way up and up. Correction is considered healthy.
Even after this fall , still the stock is giving 227% return in last one year and more than 1000% in last two years.
What else a long term investor wants ? Though some short term traders and investors those who go with the momentum and whose aim is to make money overnight may get caught at times.
The run up was not without a reason. Its financial performance over last 2 years- order book , new capacity addition which the investors have liked . Now market perhaps would like to see repeat performance of last few quarters before further rise.
I closely monitor the defence sector for the last two years and I belive the defence story remains in tact both in terms of order book / order pipelines/potential inflows both from Indian Navy and other sources and export potential- but I may be totally wrong in my assessment.
The only way perhaps the defence sector may take a beating only if all.of a sudden India-China and india- pakistan become close frends and sign up an agreement to bring a cease fire in Arms race and all of a sudden the geo political situations improve everywhere in the world with similar agreement with a vow to bring the arms race to a full stop. Which I wish should happen- World peace. However, on the ground situation is different -Today every nation’s priority is to protect its own sovereignty and defence budget occupies the top slot
Discl : Remain invested from 2022.for long term… I may be biased. Not a buy sell recommendation.
please do your own assessment before buy/ sell.
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What does the global shipbuilding industry look like, and where is India?
All that you wanted to know about Global ship building industry and india’s current postion and future potential -very well compiled. A few points worth noting from this article.
(1) India’s position from its current rank of 22nd in global shipbuilding to the top 10 by 2030, and the top five by 2047, as part of India’s Maritime India Vision 2030.
(2) the global shipbuilding market size grows from $207.15 billion in 2023 to $220.52 billion in 2024 as per estimates.
(3) Currently, India holds only 0.06 per cent of the global shipbuilding market, a stark contrast to the dominance of China, South Korea, and Japan, which collectively control 85 per cent of the industry
(4) In 2022, ship building size was valued at $90 million and is projected to reach $8,120 million by 2033, with an astounding CAGR of 60 per cent, according to Finextra Research. This growth is attributed to factors like government support, strategic location, labour cost advantages, and a focus on niche segments such as offshore support vessels and ferries.
(5) Among top 15 ship building companies in the world , MDL and CSL occupies 10 th and 11th position…
(6) India’s MDL, CSL , Garden reach till date have focussed mainly on defence orders from Indian Navy. But the future potential looks quite good if they start building capacity and catering to the world shipping industry in a big way.
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Edit : 20 Sept , 2024
Cochin Shipyard included in FTE world index. shares surge 10% as $30 million inflows anticipated
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Centre intends to sell 5% stake in Cochin Shipyard through the OFS route, at a floor price of Rs 1,540 per share, an exchange filing said on October 15.
The Offer For Sale, which opens on October 16, will include a base offer of 2.5% stake or 66 lakh shares, as well as a green shoe option of another 2.5%.
The OFS will open on October 16 for non-retail investors and for retail investors, the issue will open on on October 17. The indicative price for the non-retail category will be released separately.
My previous attempts were somewhat unsuccessful in fpo for retail. When they declare the floor price for retail and is it necessary to place the order above that price? Request your inputs pls.
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Cochin shipyard today opened 4% lower and was expected to trend still lower close to the floor price of 1540.
But the dip was bought out and the stock price remains firm. this may be because the stock has already corrected 40% from all time high.
If one is willing to buy for Rs 2 lakh and above amount , one can bid @1540 and above. Chances of getting is higher - though it would depend upon once again on demand and supply position.
That would also be true for retail tomorrow when the floor price is fixed.
However , i would take the OFS ahead of Q2 results with a pinch of salt.
Normally shipping companies may or may not be able to deliver the same growth rate QoQ or YoY due to the nature of the business , though it may be a good long term investment.
Discl : invested from lower level and as of now it is my long term idea. it is not a buy sell recommendation.pl do your own assessment before buying
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Green Shoe option exercised , Cut-off price may be 1542.55 tomorrow can see more selling pressure as all allotted HNI will try to get exit at some profit.
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