Cochin Shipyard’s shares climbed by 10% to a new all-time high following their impressive Q4 earnings announcement on Friday. The company reported a huge 558% year-on-year increase in net profit, reaching ₹258.88 crore. Revenue from operations also saw a significant jump to ₹1,366 crore, up 103% from ₹671 crore the previous year.
For the fiscal year 2024, net profit surged to ₹783 crore from ₹304 crore in FY23, while revenue from operations increased to ₹4,140 crore from ₹2,571 crore in FY23.
Recently, the company’s shares have gained momentum, partly due to opinion polls suggesting that the BJP will likely form the government for a third term with a majority. This has led the market to expect continued investment in defense spending.
“A strong BJP mandate would mean more focus on infrastructure spending, which would benefit sectors like industrials, capital goods, utilities, defense, cement, and real estate,” noted global brokerage firm UBS.
Over the past 10 sessions, Cochin Shipyard’s shares have jumped 68%. This has resulted in a remarkable 725% gain over the past year and an impressive 1,141% increase over two years.
Recent Developments
Earlier this month, Cochin Shipyard secured an order from a European client to design and build a hybrid service operation vessel (SOV) with an option for two more vessels. These ships will use hybrid battery systems to improve energy efficiency and reduce carbon emissions.
The vessels are designed for the service, maintenance, and operational needs of the offshore wind farm industry in Europe, where there is high demand for sustainable energy solutions. The project is expected to be completed by the end of 2026.
This order is classified as ‘large’, within the ₹500-1,000 crore range, though the exact value wasn’t disclosed.
Strong Future Outlook
Founded on March 29, 1972, Cochin Shipyard is a wholly-owned Government of India enterprise. It was granted ‘Miniratna’ status in 2008. Strategically located on India’s west coast, it sits on a major sea route connecting Europe, West Asia, and the Pacific Rim. The shipyard is close to Kochi port and offshore oil fields, and relatively near the Middle East.
According to ICICI Direct’s March report, the Indian Navy’s upcoming warship procurement plans are promising for the company. Advanced discussions about another aircraft carrier could lead to an additional order worth around ₹40,000 crore.
In the commercial sector, there are opportunities for electric vessels in Europe, with about 2,500 vessels set to be replaced with eco-friendly options. The company also expects significant growth in the ship-repair segment for both defense and commercial industries.
ICICI forecasts substantial growth in revenue and profit for Cochin Shipyard from FY24 to FY26, driven by increased execution rates and a higher contribution from the margin-enhancing ship repair segment. They predict a compound annual growth rate (CAGR) of about 23% for revenue and around 36% for profit after tax (PAT) from FY23 to FY26, reversing the decline seen from FY20 to FY23.
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