A small cap shipping company, Cochin Shipyard share price has hit a 20% upper circuit on 7 Sep. Will the rally comtinue? Here is a brief history of the company and it’s plans for future that can keep the price pumping.
What does Cochin Shipward do ?
Cochin Shipyard Ltd (CSL) is a leading public sector shipbuilding and repair company in India. It was incorporated in 1972 as a fully owned Government of India company and has its headquarters in Kochi, Kerala. CSL has two shipyards, one in Kochi and another in Kolkata, and a joint venture with Samsung Heavy Industries in Gujarat.
CSL is engaged in the design, construction, and repair of various types of vessels, including naval ships, coast guard ships, commercial ships, and offshore platforms. CSL has built some of the most advanced and complex vessels for the Indian Navy, such as the aircraft carrier INS Vikrant, the technology demonstration vessel INS Arihant, and the anti-submarine warfare corvette INS Kiltan.
CSL also has a strong presence in the commercial shipbuilding market, catering to both domestic and international clients. CSL has built cargo vessels, passenger vessels, tugboats, dredgers, and offshore support vessels for various sectors such as oil and gas, tourism, port development, and inland waterways.
CSL’s revenue mainly comes from its shipbuilding segment, which accounts for about 80% of its total income. The remaining 20% comes from its ship repair segment, which provides services such as dry docking, refitting, conversion, and maintenance of vessels.
Cochin Shipyard Stock Performance
CSL has been witnessing a phenomenal growth in its share price in the recent past. The stock hit a 52-week high of Rs 1,146 on Thursday, September 7, 2023 up by 20% from the previous day. The stock has gained more than 26% in the last five trading sessions, 71% in the last one month, and 113% since the beginning of the year.
Why is Cochin Shipyard share price rising
One of the major reasons for this surge is the huge order book that CSL has secured from various clients. CSL’s order book stood at Rs 25,000 crore as of March 31, 2023, which gives a revenue visibility of over four years. The order book includes some prestigious projects such as:
- The construction of six Next Generation Missile Vessels (NGMV) for the Indian Navy worth Rs 10,000 crore. This is the largest naval order ever won by CSL and will enhance its capabilities in building state-of-the-art warships.
- The construction of India’s largest Trailer Suction Hopper Dredger (TSHD) with a capacity of 12,000 cubic meters for the Dredging Corporation of India (DCI) worth Rs 1,600 crore. This project is being executed in collaboration with IHC Holland BV, a global leader in dredging technology. This project will enable CSL to tap into the growing demand for dredging services in India and abroad.
- The construction of two high-end Construction Support Operation Vessels (CSOV) for a European client worth Rs 1,200 crore. This is the first time that CSL has ventured into the offshore wind segment, which has huge potential in the renewable energy sector.
- The construction of various vessels for inland waterways and coastal shipping under the Sagarmala project worth Rs 1,000 crore. This project is being undertaken by CSL’s subsidiary Hooghly Cochin Shipyard Limited (HCSL) in West Bengal. This project will boost CSL’s presence in the emerging market of inland water transport.
Apart from these projects, CSL also has a healthy pipeline of orders from other clients such as Indian Oil Corporation (IOC), Cochin Port Trust (CPT), Kerala State Water Transport Department (KSWTD), and Andaman & Nicobar Administration.
Another factor that has contributed to CSL’s stellar performance is its strong financials and operational efficiency. CSL has maintained a consistent growth in its revenue and profitability over the years. In FY23, CSL reported a revenue of Rs 3,123 crore, up by 12% from FY22. Its net profit was Rs 622 crore, up by 14% from FY22. Its earnings per share (EPS) was 49.54, up by 14% from FY22.
CSL has also maintained a healthy balance sheet with low debt and high liquidity. Its debt-to-equity ratio was 0.07 as of March 31, 2023, which is one of the lowest among its peers. Its cash and bank balance was Rs 2,814 crore as of March 31, 2023, which is more than enough to meet its working capital and capital expenditure requirements.
CSL has also achieved a high level of operational efficiency by adopting best practices and technologies in its shipbuilding and repair processes. CSL has implemented an integrated management system that covers quality management (ISO 9001), environmental management (ISO 14001), occupational health and safety management (OHSAS 18001), and information security management (ISO 27001). CSL has also obtained certifications from various national and international agencies such as Indian Register of Shipping (IRS), American Bureau of Shipping (ABS), Bureau Veritas (BV), Lloyd’s Register (LR), and Det Norske Veritas (DNV).
CSL has also invested in modernizing and expanding its infrastructure and facilities to meet the growing demand and complexity of its projects. CSL has installed a new 310-meter dry dock, which is the largest in India and the second largest in Asia. CSL has also commissioned a new 600-tonne goliath crane, which is the largest in India and the third largest in the world. CSL has also acquired a new ship lift system, which can lift vessels up to 6,000 tonnes. These facilities have enhanced CSL’s capacity and productivity significantly.
Future Prospects
CSL’s future prospects look bright as it continues to leverage its strengths and opportunities in the shipbuilding and repair industry. CSL has a clear vision to become a global leader in shipbuilding and repair by 2030. CSL has identified four strategic pillars to achieve this vision:
- Diversification: CSL aims to diversify its product portfolio and customer base by entering into new segments such as offshore wind, LNG carriers, cruise ships, and defense exports.
- Innovation: CSL aims to innovate its products and processes by adopting cutting-edge technologies such as artificial intelligence, robotics, automation, digitalization, and green energy.
- Collaboration: CSL aims to collaborate with various stakeholders such as customers, suppliers, partners, academia, research institutions, and government agencies to create value and synergy.
- Excellence: CSL aims to excel in its performance by enhancing its quality, safety, efficiency, and profitability.
CSL is well-positioned to achieve its vision and create value for its shareholders, customers, employees, and society at large. CSL is a shining example of a successful public sector enterprise that has transformed itself into a world-class shipyard.
Conclusion
Cochin Shipyard Ltd (CSL) is a small cap shipyard company that has hit the 20% upper circuit on Thursday, September 7, 2023. The company has a robust order book, strong financials, and high operational efficiency. The company also has a clear vision and strategy to become a global leader in shipbuilding and repair by 2030. CSL is a stock that offers attractive returns and growth potential for investors who are looking for quality stocks in the shipbuilding sector.