StockEdge.com
  • Products
    • StockEdge Premium
    • StockEdge Pro
    • StockEdge Club
    • Compare Plans
StockEdge Blog
  • Trending Stocks
  • Insights
    • All
    • Business Houses
    • Markets themes
    • Stock Insights
    Top performing blue chip stocks to buy and invest in 2023

    Top 5 Blue Chip Stocks to Buy and Invest in 2023

    Adani Enterprises FPO: Detailed Analysis, GMP and Review?

    Adani Enterprises FPO: Detailed Analysis, GMP and Review?

    Top 5 Defence Stocks to Invest in India

    Top 5 Defence Stocks to Invest in India

    Top 5 Stocks to Look for in 2023

    Top 5 Stocks to Look for in 2023

    Cochin Shipyard – A strong defense play for India

    Cochin Shipyard – A strong defense play for India

    Avanti Feeds – Shrimply Irresistible

    Avanti Feeds – Shrimply Irresistible

    Gati Ltd. – Can it ride the Logistic Industry’s Tailwinds?

    Gati Ltd. – Can it ride the Logistic Industry’s Tailwinds?

    Atul Auto: A Curious Case of Value Investing

    Atul Auto: A Curious Case of Value Investing

    Dalmia Bharat Ltd. – Building the nation brick by brick

    Dalmia Bharat Ltd. – Building the nation brick by brick

  • Technical Analysis
    Chart Patterns – Unique Blend of Human & Artificial Intelligence

    Chart Patterns – Unique Blend of Human & Artificial Intelligence

    StockEdge Version Update : 9.0

    StockEdge Version Update : 9.0

    SE Blog- How to beat the street with Sector Rotation Strategy.

    SE Blog- How to beat the street with Sector Rotation Strategy.

    StockEdge Version Update 8.2

    StockEdge Version Update 8.2

    Derivative Analytics

    An Insightful Research Tool For Derivative Analytics

    Introducing Put-Call Ratio a Derivative Indicator in the Market

    Introducing Put-Call Ratio a Derivative Indicator in the Market

    A Powerful Technical Indicator Beta & Beta Scans

    A Powerful Technical Indicator Beta & Beta Scans

    Technical Analysis using Edge Charts

    Technical Analysis using Edge Charts

    What is Adaptive Relative Strength & Static Relative Strength Scans?

    What is Adaptive Relative Strength & Static Relative Strength Scans?

  • Fundamental Analysis
    • All
    • Cash Flow Ratios
    • Efficiency ratios
    • Growth Ratios
    • Liquidity Ratios
    • Return Ratios
    • Solvency ratios
    • Valuation Ratios
    StockEdge Version Update 8.2

    StockEdge Version Update 8.2

    Understanding the Importance of creating Fundamental Scans

    Understanding the Importance of creating Fundamental Scans

    Using My Combination Scan to Identify best in an Industry

    Using My Combination Scan to Identify best in an Industry

    Cost Income ratio

    Cost to Income Ratio(%)

    Cost of Liability

    Cost of Liabilities (%)

    Operating Cost to Assets Ratio (%)

    Operating Cost to Assets Ratio (%)

  • StockEdge Tutorials
    Chart Patterns – Unique Blend of Human & Artificial Intelligence

    Chart Patterns – Unique Blend of Human & Artificial Intelligence

    StockEdge Version Update : 9.0

    StockEdge Version Update : 9.0

    Powerful Investment Themes for Retail Investors

    Powerful Investment Themes for Retail Investors

    SE Blog- How to beat the street with Sector Rotation Strategy.

    SE Blog- How to beat the street with Sector Rotation Strategy.

    StockEdge Version Update 8.3

    StockEdge Version Update 8.3

    StockEdge Version Update 8.2

    StockEdge Version Update 8.2

    Using Investor Portfolios Section to track Big Bulls like Rakesh Jhunjhunwala

    Using Investor Portfolios Section to track Big Bulls like Rakesh Jhunjhunwala

    StockEdge Version 8.1 – It keeps getting Better & Better

    StockEdge Version 8.1 – It keeps getting Better & Better

    StockEdge Version Update 8.0 – Like never before

    StockEdge Version Update 8.0 – Like never before

  • Mutual Fund
    Top 5 Mutual Funds for 2022 where you can start your SIP

    Top 5 Mutual Funds for 2022 where you can start your SIP

    What are Value Funds and its Advantages?

    What are Value Funds and its Advantages?

    A Beginners Guide to Thematic Funds

    A Beginners Guide to Thematic Funds

    Understanding Sector Funds and their Benefits to our Portfolio

    Understanding Sector Funds and their Benefits to our Portfolio

    Are Dividend Yield Funds a good option to invest in?

    Are Dividend Yield Funds a good option to invest in?

    What are Contra Funds and their advantages?

    What are Contra Funds and their advantages?

    Trending Tags

    No Result
    View All Result
    • Trending Stocks
    • Insights
      • All
      • Business Houses
      • Markets themes
      • Stock Insights
      Top performing blue chip stocks to buy and invest in 2023

      Top 5 Blue Chip Stocks to Buy and Invest in 2023

      Adani Enterprises FPO: Detailed Analysis, GMP and Review?

      Adani Enterprises FPO: Detailed Analysis, GMP and Review?

      Top 5 Defence Stocks to Invest in India

      Top 5 Defence Stocks to Invest in India

      Top 5 Stocks to Look for in 2023

      Top 5 Stocks to Look for in 2023

      Cochin Shipyard – A strong defense play for India

      Cochin Shipyard – A strong defense play for India

      Avanti Feeds – Shrimply Irresistible

      Avanti Feeds – Shrimply Irresistible

      Gati Ltd. – Can it ride the Logistic Industry’s Tailwinds?

      Gati Ltd. – Can it ride the Logistic Industry’s Tailwinds?

      Atul Auto: A Curious Case of Value Investing

      Atul Auto: A Curious Case of Value Investing

      Dalmia Bharat Ltd. – Building the nation brick by brick

      Dalmia Bharat Ltd. – Building the nation brick by brick

    • Technical Analysis
      Chart Patterns – Unique Blend of Human & Artificial Intelligence

      Chart Patterns – Unique Blend of Human & Artificial Intelligence

      StockEdge Version Update : 9.0

      StockEdge Version Update : 9.0

      SE Blog- How to beat the street with Sector Rotation Strategy.

      SE Blog- How to beat the street with Sector Rotation Strategy.

      StockEdge Version Update 8.2

      StockEdge Version Update 8.2

      Derivative Analytics

      An Insightful Research Tool For Derivative Analytics

      Introducing Put-Call Ratio a Derivative Indicator in the Market

      Introducing Put-Call Ratio a Derivative Indicator in the Market

      A Powerful Technical Indicator Beta & Beta Scans

      A Powerful Technical Indicator Beta & Beta Scans

      Technical Analysis using Edge Charts

      Technical Analysis using Edge Charts

      What is Adaptive Relative Strength & Static Relative Strength Scans?

      What is Adaptive Relative Strength & Static Relative Strength Scans?

    • Fundamental Analysis
      • All
      • Cash Flow Ratios
      • Efficiency ratios
      • Growth Ratios
      • Liquidity Ratios
      • Return Ratios
      • Solvency ratios
      • Valuation Ratios
      StockEdge Version Update 8.2

      StockEdge Version Update 8.2

      Understanding the Importance of creating Fundamental Scans

      Understanding the Importance of creating Fundamental Scans

      Using My Combination Scan to Identify best in an Industry

      Using My Combination Scan to Identify best in an Industry

      Cost Income ratio

      Cost to Income Ratio(%)

      Cost of Liability

      Cost of Liabilities (%)

      Operating Cost to Assets Ratio (%)

      Operating Cost to Assets Ratio (%)

    • StockEdge Tutorials
      Chart Patterns – Unique Blend of Human & Artificial Intelligence

      Chart Patterns – Unique Blend of Human & Artificial Intelligence

      StockEdge Version Update : 9.0

      StockEdge Version Update : 9.0

      Powerful Investment Themes for Retail Investors

      Powerful Investment Themes for Retail Investors

      SE Blog- How to beat the street with Sector Rotation Strategy.

      SE Blog- How to beat the street with Sector Rotation Strategy.

      StockEdge Version Update 8.3

      StockEdge Version Update 8.3

      StockEdge Version Update 8.2

      StockEdge Version Update 8.2

      Using Investor Portfolios Section to track Big Bulls like Rakesh Jhunjhunwala

      Using Investor Portfolios Section to track Big Bulls like Rakesh Jhunjhunwala

      StockEdge Version 8.1 – It keeps getting Better & Better

      StockEdge Version 8.1 – It keeps getting Better & Better

      StockEdge Version Update 8.0 – Like never before

      StockEdge Version Update 8.0 – Like never before

    • Mutual Fund
      Top 5 Mutual Funds for 2022 where you can start your SIP

      Top 5 Mutual Funds for 2022 where you can start your SIP

      What are Value Funds and its Advantages?

      What are Value Funds and its Advantages?

      A Beginners Guide to Thematic Funds

      A Beginners Guide to Thematic Funds

      Understanding Sector Funds and their Benefits to our Portfolio

      Understanding Sector Funds and their Benefits to our Portfolio

      Are Dividend Yield Funds a good option to invest in?

      Are Dividend Yield Funds a good option to invest in?

      What are Contra Funds and their advantages?

      What are Contra Funds and their advantages?

      Trending Tags

      No Result
      View All Result
      StockEdge Blog
      Home Insights
      Cochin Shipyard – A strong defense play for India

      Cochin Shipyard – A strong defense play for India

      StockEdge by StockEdge
      December 5, 2022
      Reading Time: 9 mins read
      10.5k
      VIEWS
      Share on FacebookShare on TwitterShare On WhatsApp

      Table of Contents

      • The Story
        • Let us try to understand the business model of Cochin Shipyard!
        • Let us look at the Financials of Cochin Shipyard!
        • Who is sailing the ship?
        • Road Ahead…

      In today’s stock insights, we will talk about Cochin Shipyard Ltd., a PSU stock that provides shipbuilding and repair services in the Defense, LNG, large commercial, and small vessel space. Cochin Shipyard has been in the news for quite some time now.

      The Story

      Cochin Shipyard

      On 28th July 2022, Cochin Shipyard Ltd. delivered the country’s first indigenously-made aircraft carrier (IAC-1) to the Indian Navy. The Navy said the indigenous Aircraft Carrier (IAC) ‘Vikrant’ was delivered to it after “extensive user acceptance trials” and called it a “momentous day in the Indian Maritime History.”

      Subscribe To StockEdge Club Subscribe To StockEdge Club Subscribe To StockEdge Club

      Cochin Shipyard was established as a Government of India company in 1972, with the first phase of facilities opening in 1982. Cochin Shipyard is India’s largest shipbuilding and maintenance facility. The yard can build vessels weighing up to 1.1 million tonnes and repair vessels weighing up to 1.25 million tonnes per year. 

      Cochin Shipyard has recently received shipbuilding orders from internationally renowned companies in Europe and the Middle East.

      They are strategically located on India’s west coast, halfway along the main sea route connecting Europe, West Asia, and the Pacific Rim—a busy international maritime route. Their shipyard is near the Kochi Port and offshore oilfields on India’s western coast and relatively close to the Middle East. 

      Cochin Shipyard has progressed from the construction of bulk carriers to the construction of smaller and more technically sophisticated vessels such as platform supply vessels (PSV) and anchor handling tug supply vessels (AHTS). 

      They had built and delivered 166 vessels as of March 2022, including 27 defense, 20 large, 35 offshore support, and 84 small and medium vessels. This includes 47 vessels exported to the most demanding clients in Norway, the Netherlands, Cyprus, the United States, Germany, and several other countries. 

      Cochin Shipyard has collaborated with several industry leaders, including Rolls Royce Marine (Norway), GTT (France), Vard Group (Norway), and others.

      Aside from shipbuilding, Cochin Shipyard can perform complex and sophisticated ship and oil rig upgrades, routine maintenance, repairs, and ship life extension. They are India’s only yard that has performed dry dock repairs on the aircraft carriers INS Viraat and INS Vikramaditya. They have also entered into agreements for the management and operation of ship repair facilities with the Mumbai Port Trust, the Andaman and Nicobar Administration, and the Kolkata Port Trust.

      Cochin Shipyard operates at three locations: Kochi, Kolkata, and Malpe. In addition, they operate four ship repair facilities in Kochi, Mumbai, Kolkata, and Port Blair. They have India’s largest hull fabrication shop, with a monthly capacity of 2,000 tonnes of steel. 

      Their dock is served by two gallant cranes weighing 150 and 300 tonnes. Cochin Shipyard employs an integrated hull outfit and painting (IHOP) system for sound and efficient vessel construction, as used in Japanese yards. 

      Cochin Shipyard’s notable clients include the Indian Navy, the Indian Coast Guard, the Shipping Corporation of India, and the Oil and Natural Gas Corporation (ONGC).

      Cochin Shipyard

      Let us try to understand the business model of Cochin Shipyard!

      Cochin Shipyard primarily engages in two business segments: shipbuilding and ship repairs. They serve clients in the Indian defense sector as well as clients in the commercial sector worldwide. More than 80% of the top line comes from defense. Shipbuilding for clients in the defense sector should be complex and time-consuming but not cyclical, whereas contracts in the commercial sector should be less complex but cyclical. Ship repair is the more profitable of the two segments.

      Contracts are awarded through the nomination and competitive bidding. Nomination entails placing orders for warships with selected public sector shipyards without competitive tendering. All high-value orders for Indian shipyards are obtained through nomination. Nominated orders from the defense ministry give public sector yards a huge advantage in the bidding process, creating an unequal playing field for the private sector.

      Let us look at the Financials of Cochin Shipyard!

      Cochin Shipyard

      Revenue increased by 13% YoY to Rs.3,191 crore in FY22. Shipbuilding sales increased by 4% year on year to Rs.2511 crore, with IAC accounting for Rs.1793 crore, and Rs.2700 crore is still to be booked from this project. They have also delivered six floating border outpost vessels, with the remaining three in advanced stages of production. 

      Additionally, Cochin Shipyard designed and delivered the first hybrid electric aluminum catamaran hull vessel for the Kochi Water Metro Project, resulting in a revolutionary sustainable urban mobility water transportation solution. Due to technical issues, the remaining 19 vessels scheduled for delivery have been delayed.

      Ship repair sales increased 64% year on year to Rs678 crore. They repaired 12 ships from their single dry dock in Cochin during FY22. They began ship repair operations in Port Blair in November 2021 with an emergency repair of the MV Sindhu, followed by a dry dock repair of the MV Rajhans. 

      As a capital asset, ships require regular maintenance, so the ship repairing business provides a consistent source of income for Cochin Shipyard. Cochin Shipyard has the necessary expertise and is India’s only yard with repaired aircraft carriers. Cochin Shipyard will likely emerge as the frontrunner in any large project requiring national security and extensive experience.

      As a labor-intensive industry, the cost of labor is a major determinant of a company’s competitive position concerning others. 

      Cochin Shipyard has the lowest employee cost in the industry because they execute projects efficiently thanks to its prudent subcontracting model, with most of its workforce working on a contract basis.

      Revenue in Q2FY23 was at Rs.683.2 crore, a 1.9% decrease YoY due to subdued execution in the ship-building segment. Revenue increased 55% QoQ. EBIDTA was at Rs.135.3 crore, down 17.7% YoY due to higher RM and other costs. EBITDA margin fell 382 basis points YoY, primarily due to margin contraction in the shipbuilding segment. PAT was at Rs.112.8 crore, down 14.1% YoY but up 167.4% QoQ.

      One can track the dividend and share price of Cochin Shipyard from the link given here.

      Who is sailing the ship?

      Madhu Nair is the chairman and managing director of Cochin Shipyard. He did his Bachelor of Technology (naval architecture and shipbuilding) from Cochin University of Science and Technology and a Master of Engineering (naval architecture and ocean engineering) from Osaka University (Japan). 

      He has over 34 years of professional experience with Cochin Shipyard, starting as an executive trainee in 1988 and spanning the entire shipyard management spectrum. 

      Road Ahead…

      Cochin Shipyard is building two major expansion projects in Kochi: a new dry dock and an international ship repair facility (ISRF). ISRF is an Rs.970-crore project that the government approved in May 2016. The facility can repair up to 80 vessels, increasing Cochin Shipyard’s capacity by 70% for the number of ships that can be repaired annually. This project, which was supposed to be completed in 2020, has been pushed back to the end of 2023 due to various factors, including COVID-19 and financial difficulties encountered by the appointed contractor. The construction contract was eventually terminated in February 2022.

      The physical progress of construction works reported until contract termination is 78%. They are in the process of appointing alternate contractors to complete the ISRF project’s work. However, no cost overruns are anticipated as a result of this.

      Cochin Shipyard is also constructing a new dry dock within its main premises to support shipbuilding and ship repair activities, such as the construction of larger capacity vessels and the repair of offshore rigs. The new dry dock, which features a 600-tonne gantry crane, will allow the company to construct larger ships such as Suezmax, 70,000-tonne aircraft carriers, jack-up rigs, and LNG (liquefied natural gas) vessels, to name a few. This facility will cost Rs1,799 crore and is scheduled to open in 

      Cochin Shipyard’s order book has grown over the years and now stands at Rs11,260 crore, or 3.5x FY22 revenue. This includes an Rs. 6000 crore contract for constructing eight anti-submarine warfare corvettes and an Rs.10,000 crore order for next-generation missile vessels. It was the lowest bidder for the construction of six next-generation missile vessels (NGMV), and the Indian Navy’s order for these vessels is nearing completion and is expected to be placed soon.

      They also entered the European short-sea shipping segment by signing an Rs.742 crore contract with HS Service GMBH & Co KG (Germany) to build eight HS Eco Freighter vessels. This opens up a new avenue for the company to secure additional orders.

      Cochin Shipyard has also delivered two autonomous zero-emission vessels to Norway, the world’s shipping behemoth.

      Cochin Shipyard also made history by signing an Rs.800 crore contract with Dredging Corporation of India (DCI) to build India’s largest dredger with technology and design assistance from IHC Holland, the world’s largest dredger builder. 

      Dredger construction is an inherently high-entry-barrier business, giving Cochin Shipyard an advantage because it has the necessary infrastructure.

      Cochin Shipyard now has a new business vertical and expects to receive two more orders for dredgers.

      They have established a separate division called ‘CSL Strategic & Advanced Solutions (C-SAS)’ to focus on green energy and future maritime technologies. They are constructing the country’s first indigenous hydrogen-powered electric vessels as part of a pilot project funded by the Ministry of Ports, Shipping, and Waterways. 

      The hydrogen fuel cell vessel, known as the fuel cell electric vessel (FCEV), is expected to cost around Rs.18 crore and is based on low-temperature proton exchange membrane technology (LT-PEM). The FCEV is part of India’s transformative efforts in green energy innovation, new technology, and sustainable, cost-effective alternate fuels.

      The Indian Navy has sought permission to build a third aircraft carrier since 2015. The carrier would be India’s second indigenous aircraft carrier (IAC-2) and a 65,000-tonne warship if approved. Cochin Shipyard will construct the proposed warship, INS Vishal, at approximately Rs.50,000 crore cost. The Navy hopes to have it in service by 2030. However, due to the high cost of building warships, the Centre has yet to approve the third carrier.

      However, as with such companies, there are risks as Cochin Shipyard derives most of its income from the Indian defense sector, primarily the Indian Navy. Then, the shipbuilding industry is directly linked to the shipping industry and is cyclical. 

      Most of the shipbuilding contracts are fixed-price in nature. Any rise in commodity prices would result in a cost overrun. Also, delays in the execution of contracts would impact profitability and the Company’s performance.

      So, we will have to wait and see how Cochin Shipyard develops from here on out.

      Until then, keep an eye out for the next blog through “Stock Insights.” Also, please share it with your friends and family.

      To get more detailed analysis and Reports on Stocks, visit our Edge Report Section by subscribing to our StockEdge premium plans.

      Happy Investing!

      Tags: Cochin ShipyardDefensestock insights
      ShareTweetSend
      Subscribe On Telegram Subscribe On Telegram Subscribe On Telegram
      Previous Post

      Avanti Feeds – Shrimply Irresistible

      Next Post

      Top 5 Stocks to Look for in 2023

      StockEdge

      StockEdge

      StockEdge is a self-help Equity and Mutual Fund research tool. It empowers retail investors to identify investment opportunity with all the necessary data and analytics.

      Next Post
      Top 5 Stocks to Look for in 2023

      Top 5 Stocks to Look for in 2023

      Top 5 Defence Stocks to Invest in India

      Top 5 Defence Stocks to Invest in India

      StockEdge Version Update : 9.0

      StockEdge Version Update : 9.0

      Leave a Reply Cancel reply

      Your email address will not be published. Required fields are marked *

      Contact Us
      • Timing (Mon-Sat): 10 am to 7 pm
      • Sales: +919830994463
      • Support: +919830994402
      • Club Support: +916289906895
      • Affiliate: +917003567131
      Recent Posts
      Top performing blue chip stocks to buy and invest in 2023
      Top 5 Blue Chip Stocks to Buy and Invest in 2023
      Adani Enterprises FPO: Detailed Analysis, GMP and Review?
      Important Links
      • StockEdge.com
      • StockEdge Premium
      • - Quarterly Membership
      • - Annual Membership
      • StockEdge Analyst
      • StockEdge Club
      • Compare Plans
      An Initiative Of

      © 2023 Kredent InfoEdge Pvt Ltd.

      Facebook-f Twitter Instagram Linkedin-in Youtube Pinterest-p

      Get StockEdge App

      No Result
      View All Result
      • Home
      • Article Categories
        • Fundamental Analysis
        • Technical Analysis
        • Market Themes
        • StockEdge Tutorials
        • StockEdge Version Updates
      • Products
        • StockEdge Premium
        • StockEdge Pro
        • StockEdge Club
        • Compare Plans
      • Visit StockEdge.com

      © 2023 Kredent InfoEdge Pvt Ltd.