ICICI Direct has given Buy recommendation for Cochin Shipyard recommended buy rating on the stock with a target price of Rs 500 in its research with a target price of Rs. 500 in its research report issued on Jun 19, 2021
ICICI Direct’s research report on Cochin Shipyard
Cochin Shipyard exited FY21 with an outstanding performance in Q4 wherein revenue and operating margins were a beat to our estimates. Ship repair segment, which was lagging since Covid, has now kicked in strong revenue and margins adding thrust to Cochin’s overall performance. The company declared a dividend of Rs 2.5 per share during the quarter. Revenue for the quarter came in at Rs 1080.3 crore (vs. I-direct estimate of Rs 975 crore), up 32.3% YoY, 44.3% QoQ. Gross margins contracted ~411 bps YoY, 2150 bps QoQ (YoY being a higher base, QoQ being a one-off exception). However, on a broader perspective, GMs were in their median range. EBIDTA increased 58% YoY to Rs 257.5 crore (I-direct estimate of Rs 187 crore). Ensuing EBIDTA margins came in at 23.8% vs. 20% YoY (I-direct estimate: 19.2%). Ensuing PAT came in at Rs 236.2 crore, up 70.2% YoY, 5.6% QoQ.
CSL at the CMP trades 11% earnings yield on FY21 EPS. We roll over to FY23E numbers and value CSL at 9x FY23E EPS to arrive at a target price of Rs 500/share. We maintain our BUY rating.