Fueling the recent surge in PSU counters are defence stocks, especially those involved in shipbuilding. These companies are experiencing substantial increases in share values, hitting record highs with each passing day. The uptrend is propelled by robust order wins and improvement in their financial performance.
The Indian defence shipbuilding sector remains promising, buoyed by the ambitious acquisition plans of the Indian Navy and Indian Coast Guard. This outlook bodes well for Indian shipbuilders and the entire ecosystem supporting them.
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The government aims to boost India’s defence exports to US$5 billion by 2024–25, underscoring the sector’s increasing significance and potential.
Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, and Cochin Shipyard have all experienced significant jumps in their share prices this week, with returns reaching as high as nearly 34%.
Cochin Shipyard: Up over 700% in a year
Cochin Shipyard shares have emerged as top performers among its peers, surging by 34% in the last four sessions alone. This momentum has propelled the shares to a remarkable 722% gain over the past year and an impressive 1058% increase in just two years.
Earlier this month, the company bagged an order from a European client, for the design and construction of a hybrid service operation vessel (SOV) with an option for two more such vessels. The vessel is equipped with hybrid battery systems to improve the energy efficiency and reduce the carbon footprints.
The vessel is designed and built for the service, maintenance and operational needs of the offshore wind farm industry in the European market where sustainable energy solutions are in high demand. The project is expected to be completed by the end 2026, said Cochin Shipyards in its exchange filing.
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The order has been categorised as ‘large’, falling within the ₹500-1000 crore range; however, the precise value of the deal was not revealed in the filing.
The fourth quarter and FY24 results of the company are expected to be released today.
Mazagon Dock Shipbuilders: Gains 321% in a year
Mazagon Dock Shipbuilders also surged by 10.88% this week to ₹3,227 apiece and 35.67% in May, translating to a remarkable 321% gain over the last year.
Over the past three years, the company’s shares have surged by 1427%. The shares are now trading 2125% above their issue price of ₹145 per share in October 2020.
It took the stock nearly 34 months to surpass the ₹1,000 mark after its listing. Subsequently, it took only four months to cross the ₹2,000 mark in September 2023, continuing its momentum to reach a new all-time high of ₹3,248 per share in today’s trading session.
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As of the end of the December quarter, the company boasts an impressive order book totaling ₹38,389 crore, providing strong revenue visibility, according to the company’s Q3 investor presentation. Its Q4 and FY24 results are expected to be released on May 29
Garden Reach Shipbuilders & Engineers: Rallies over 200% in a year
During the previous trading session, Garden Reach Shipbuilders & Engineers witnessed a staggering 20% surge in its shares following the company’s exceptional performance in the March quarter and fiscal year (FY24).
In Q4FY24, the company’s net profit more than doubled, soaring by 101.81% year-on-year (YoY) to ₹111.60 crore, marking its highest ever. Additionally, its sales experienced a remarkable increase of 68.96% YoY, reaching ₹1,015.73 crore in the quarter under review, compared to ₹601.17 crore in the same period last year.
For FY24, the profit after tax (PAT) stood at ₹357 crore, reflecting a notable 57% growth from ₹228 crore recorded in FY23. The Indian Navy and the Indian Coast Guard remain the principal customers of GRSE. A significant portion of the company’s revenue emanates from its dealings with these two esteemed establishments.
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In mid-May, the company announced that it had received a Notification of Award for the procurement of 01 Trailing Suction Hopper Dredger (Hopper Capacity: 1000 m3) with spare parts from the Government of the People’s Republic of Bangladesh.
The total contract value is USD 1,65,75,210, excluding taxes, according to the company’s exchange filing.
GRSE is a premier shipbuilding company in India under the administrative control of the Ministry of Defence, primarily catering to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard.
In today’s trading session, the company’s shares surged by 5.7%, reaching a new record high of ₹1,508 apiece. This marks a 47% rally so far this month and an impressive 205% surge over the past year.
Disclaimer: We advise investors to check with certified experts before taking any investment decisions.
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Published: 24 May 2024, 01:34 PM IST
