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The government will divest a 5% stake in Cochin Shipyard at ₹1,540 per share, with the sale starting on October 16. Cochin Shipyard’s recent quarter profit surged 76.5% YoY.
The Indian government has announced plans to divest a 5% stake in Cochin Shipyard Ltd through an Offer for Sale (OFS). The floor price for the OFS is set at ₹1,540 per share. The divestment includes a base offer of 2.5%, with an additional 2.5% available as a green shoe option.
The Offer for Sale opens on October 16 for non-retail investors and on October 17 for retail investors. As of September 30, 2024, the government held a 72.86% stake in Cochin Shipyard. The OFS is expected to help reduce the government’s shareholding and raise capital. The set price of ₹1,540 offers investors an opportunity to acquire shares at a fixed rate, adding to the overall market liquidity.
Cochin Shipyard’s recent financial performance has been robust, attracting interest in the upcoming OFS. The company reported a net profit of ₹174.2 crore for the quarter that ended on June 30, 2024, representing a 76.5% year-on-year (YoY) increase compared to ₹98.7 crore in the corresponding quarter last year.
Cochin Shipyard’s revenue from operations rose by 61.1%, reaching ₹771.5 crore against ₹475.9 crore in the same period last year. The company's operating level performance also showed strong growth, with Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) more than doubling. It increased by 125% to ₹177.3 crore, leading to an EBITDA margin of 23%, up from 16.5% a year ago.
The company's growth was driven by its Ship Building segment, which saw revenue increase by 62% year-on-year, reaching ₹527 crore. This segment contributes 68% of Cochin Shipyard’s overall revenue. Additionally, the Ship Repair business, which accounts for the remaining 32% of total sales, grew by 63% to ₹245 crore. The segment's margin expanded significantly to 43% compared to 24% last year, indicating improved operational efficiency.
Cochin Shipyard’s share price has seen a significant drop from its all-time high of ₹2,977, reached in July 2024. As of the recent market close on October 15, 2024, the shares are down 44% from their peak but have appreciated fourfold from their initial public offering (IPO) price of ₹432. This pricing fluctuation, combined with the government’s strategic divestment, offers potential opportunities for investors.
The government’s decision to divest 5% of its stake in Cochin Shipyard at ₹1,540 per share provides an opportunity for investors amid the company’s strong financial performance. The OFS aims to increase market participation and enhance the stock’s liquidity. Cochin Shipyard’s recent growth and market dynamics make this divestment a point of interest for investors tracking the Cochin Shipyard share price.
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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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