The company reported a 47 per cent year-on-year (YoY) jump in its net profit at Rs 1,476 million. Revenue from operations came in at Rs 7,994 million, up 37 per cent while Ebitda margin (earnings before interest, tax, depreciation and amortisation) rose 734 basis points (bps) to 16.2 per cent. Earnings per share (EPS) stood at Rs 10.86 against Rs 7.93 in the corresponding quarter last fiscal.
“Cochin Shipyard (CSL) has a healthy order book of Rs 22 billion plus L1 status for anti-submarine warfare (ASW vessels) at Rs 54 billion. Shipbuilding) and ship repair revenues are likely to grow at a compounded annual growth rate (CAGR) of 24.7 per cent and 2.1 per cent respectively over FY18-20E,” said analysts at ICICI Securities in a recent report.
They estimate revenue, Ebitda and PAT CAGR of 19.2 per cent, 13.6 per cent and 5.3 per cent, respectively, in FY18-20E and maintain a 'buy' rating on the stock with a target price of Rs 520, which is 14 per cent higher than the buyback price.
As regards the order-book, analysts expect Cochin Shipyard to bag orders for the third phase of Indigenous Aircraft Carrier (IAC), pegged at nearly Rs 102.70 billion (Rs 30 billion as fixed price contract and Rs 72.70 billion as cost-plus contract). This will take the total order-book to Rs 178.72 billion.
In this backdrop, analysts suggest investors continue to hold the stock from a long-term perspective.
“The fall in stock price is a function of how the overall markets
have played out. The long-term prospects of Cochin Shipyard remain intact. The overall debt component is also at a manageable level. At the current levels, it is a good stock to hold if investors have a long-term view. However, if somebody wants to make quick money, they can surrender their shares in the buyback and then buy in the market once the price dips,” said A K Prabhakar, head of research at IDBI Capital.
Rajnath Yadav, a senior research analyst for fundamental research at Choice Broking, agrees and maintains an overweight on the stock with a mid-to-long term view given the financials.
“However, given that the markets
may remain volatile over the next few months, investors may get an opportunity to buy this stock at a lower level going ahead. One can tender the stock now and buy it back later,” Yadav recommends.