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 -MFās & 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If you see shipyards globally, they do not quote at more than 15-20 times earnings.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 ā¹84,000cr 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 shipyardsā¦
And as China is strengthening itās 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, 2024ā¦ 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=āitsnotraunaq, post:118, topic:33814ā]
Hi can anybody explain what does RFI/MidStage Order Pipeline of ā¹84,000cr 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 PSUās 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 PSUās 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 PSUās , 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 ā¦109, 191, 248, 265ā¦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 nowā¦ 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 PSUās.
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 ifās 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 riseā¦
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 growthā¦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 stockā¦
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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 positionā¦ 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 āMake in Indiaā for defence production. Therefore almost all defence stocks