Cochin Shipyard gains 7% in weak market on winning Rs 550 cr overseas order

The company has received an order of Rs 550 crore from Norway-based global logistics solution provider Samskip Group.

Shares of Cochin Shipyard rallied 7 per cent to Rs 473.65 on the BSE in Monday’s intra-day trade in an otherwise weak market after the company said it received an international order of Rs 550 crore from Norway-based global logistics solution provider Samskip Group.

At 09:21 AM; the stock was trading 4 per cent higher at Rs 462.40, as compared to 0.90 per cent decline in the S&P BSE Sensex.
Cochin Shipyard said the company has bagged order from NAVSHUTTLE 1 AS and NAVSHUTTLE 2 AS, Lysaker Norway, Companies in the Samskip Group, headquartered in Netherlands, for the design and construction of a total of two nos. of Zero Emission Feeder Container Vessels with an option for two more vessels.

The total project cost for the firm order is approximately Rs 550 crore and the first vessel is to be delievered in 28 months and the second to be within 34 months. These ships can carry abt. 365 Nos. of 45-feet long high cube containers and are intended to serve the European Market where sustainable transportation solutions are in high demand.

The project is one of the world’s first Zero Emission Feeder Container Vessels powered by Hydrogen Fuel Cells with Green Hydrogen. This is an ambitious project under the Norwegian Government’s green funding programme aimed at emission-free transport solutions by adopting sustainable path-breaking future technologies.

However, despite today’s outperformance, in past three months, Cochin Shipyard has underperformed the market by falling 24 per cent. In comparison, the S&P BSE Sensex was down 6 per cent.

ICICI Securities believe Cochin Shipyard is well placed among Indian shipbuilding companies in terms of getting more export orders considering the company’s proven capability and track record to deliver high-end vessels in western Europe.

This is the second order from Norway to Cochin Shipyard after receiving an order of two autonomous electric vessels from ASKO Maritime AS in July 2020 (delivered in June 2022).

The company is in process of executing two more export orders of commercial vessels for European clients and have been exploring more business opportunities in Europe. With this contract, Cochin Shipyard’s order backlog is estimated to be around Rs 20,500 crore (6.8x TTM revenues) including large orders like six next generation missile vessels & anti-submarine warfare corvettes for Indian Navy, export orders and ship repair contracts.

With healthy order backlog and strong opportunities in shipbuilding (in both domestic & exports) and increasing contribution in ship repair segment, Cochin Shipyard has a strong earnings visibility for the coming years, the brokerage firm said in a note.