1:2 Split, 70% Dividend: Miniratna PSU Cochin To Sail On Bulls, Prabhudas Fixes Highest Target Of Rs 1,250 TP

Cochin Shipyard, one of the leading PSU shipping companies with Miniratna status, grabbed a lot of attention during the first trading week of April month, rising by more than 20.5% on BSE. Cochin is a multi-bagger who carried a 1:2 split and rewarded a 70% dividend in 2024 so far. There potential upside of 16.5% in Cochin as Prabhudas Lilladher has fixed the highest target price of Rs 1,250. This will be a record-high level if Cochin hits the target anytime soon.

Riding on the back of a bull, Cochin accelerated to hit its all-time high of Rs 1,117.55 apiece on April 5. The stock ended at Rs 1,080.65 apiece, up by 1.01% with a market cap of Rs 28,429.82 crore.

Cochin has been a multi-bagger in the shipping basket. Currently, its share price is up by 361% from its 52-week low. From April 1st to 5th, Cochin's share zoomed by 20.5% on BSE. Broadly 2024 has been bullish for the stock, with YTD gains of nearly 59%.

Some of the key events that worked in favour of Cochin's share price in 2024 so far are its stock split by 1:2 ratio, hefty dividend payout, order book, and healthy growth prospects. Cochin Shipyard has emerged as a forerunner in the Indian Shipbuilding & Ship repair industry. This yard can build and repair the largest vessels in India.

In its technical report, Prabhudas Lilladher said, "Cochin Shipyard after a short consolidation phase has given a clear breakout above the rectangular box formation at 940 levels and with bias getting stronger has scope for further fresh round of upward move with targets of 1120 and 1270 levels. One can maintain the stop loss at 890 levels." From the current price level, Cochin shares have the potential of over 16.5% upside in the near term.

Earlier, brokerage ICICI Direct revealed that an order backlog of Rs 22,300 crores as of Dec-23 (7x TTM revenues) with a pick-up in execution, gives strong revenue growth visibility. Also, about Rs 9000 crore worth of shipbuilding contracts are in the pipeline where tenders are expected to be floated in the medium term. Apart from these, Rs 84,000 crore worth of contracts are in the RFP stage as per the management.

In Q3FY24, on a consolidated basis, the company earned a net profit of Rs 244.38 crore, higher than Rs 110.40 crore in Q3 of FY23 and Rs 181.62 crore in Q2FY24. Meanwhile, revenue from operations stood at Rs 1,056.39 crore in the third quarter of the current fiscal, as against revenue of Rs 641.65 crore in Q3FY23 and Rs 1,011.71 crore in Q2FY24.

Also, at the latest, on Saturday, Cochin announced that it signed the Master Shipyard Repair Agreement (MSRA) with the United States Navy. The MSRA is a non-financial agreement and is effective from April 05, 2024. This will facilitate the repair of US Naval vessels under the Military Sealift Command in CSL. The company has been qualified to enter into the Master Shipyard Repair Agreement (MSRA) after a detailed evaluation process and capability assessment by the US Navy - Military Sealift Command.

Earlier in 2024, Cochin carried a 1:2 stock split and 70% dividend payout so far in the current year. The stock turned ex-split on January 10, 2024, for a ratio of 1:2. It means that the face value of Cochin Shipyard which at Rs 10 was halved to Rs 5 each. This led to an increase in the number of shares and improved liquidity in Cochin.

Meanwhile, in February, Cochin turned ex-dividend for a second interim dividend of Rs 3.5 per share having a face value of Rs 5 each fully paid up (70%) for the financial year 2023-24. Earlier, Cochin turned ex-dividend on November 20, 2023, for the first interim dividend of 80% amounting to Rs 8 per share for FY24. In FY23, the company paid dividends up to 170% amounting to Rs 17 per share.

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