Cochin Shipyard - No more Cheap

Stock Opportunities
67

Why I think this is a 2.7X- 3X opportunity in next 10 years.
CMP INR 349
My hypothesis:

  1. They have a vision of 6-8x growth in next 10 years. However I assume a more modest 7-8% growth over next 10 years. We should see sales at INR 6200 crores approximately. However, If we see even 3x growth - This is probably a share that can get you 5x returns from the current valuation.
  2. No orderbook overhang anymore. Orderbook stands at close to INR 23,000 crore.
  3. Assuming the margins remain constant at 20%. I.e Profit of INR 1240 crores profit. Post tax net profit - INR 920 crore.
  4. Hence EPS after 10 years - INR 70 approx

Now assuming they pay 40% dividend today i.e INR 15 annually and this grows by 6% annually. We are looking at INR 300 as dividend per share over 10 years (Assuming you make 8% on dividend).

With EPS of INR 70. Stock price even if stays at current valuation has to be INR 665 - INR 700. However ideally it should be higher then this.

INR 665 + INR 300 (Dividend per share) = INR 965 - INR 1000.

Disclosure - Invested

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