Cochin Shipyard (CSL) is all set to win a Rs5,400-crore order from the Indian Navy for the construction and supply of eight battle ships worth over Rs5,4-0 crore, in a tightly contested competitive bidding.
CSL has emerged as the lowest (L1) bidder for designing and building of anti-submarine warfare shallow water craft (ASW-SWC) for Indian Navy. The contract for eight vessels at a cost of about Rs5,400 crore is expected to be concluded with the ministry of defence in due process.
The order was won against competitive bidding in a tender issued by the defence ministry, in which both private and public sector shipbuilders had participated.
The company will start delivering two vessels every year after 42 months of concluding all formalities. Cochin Shipyard will start receiving an advance from the Navy once milestones such steel cutting for the vessel are accomplished.
Cochin Shipyard's share price rallied 3.5 per cent intraday to hit a fresh high of Rs592.20 today, continuing the previous day's rally. The stock had ended the previous session with 11 per cent gains.
Total volume of shares traded on the bourses fell 91.11 per cent to 76,467 compared with 22-day average volume of 860,512 as investors held on to the stock in anticipation of better gains.
Shares of the company gained Rs38.90, or 7.54 per cent, to trade at Rs557.00..
Cochin Shipyard is a market leader in the Indian ship repair segment with a market share of around 39 per cent and has undertaken repairs of most complex ships of the country.
The company has been consciously improving its business mix by increasing the share of ship-repair orders (which is two times profitable compared to shipbuilding business) in its order book.
The company is also likely to receive order for phase III of the aircraft carries, which is likely to be around Rs10,900 crore. It believes these orders give strong revenue visibility to Cochin Shipyard till FY23.
Cochin Shipyard, a public sector enterprise, has been one of the most stable companies in the Indian shipbuilding and ship repair sector despite the turbulence witnessed in the global shipbuilding industry.
CSL has delivered topline, bottomline growth of 11.1 per cent, 18.7 per cent CAGR, respectively, in FY07-17.
Over the years, the company has emerged as a premier player in the Indian shipbuilding segment with expertise in design, engineering and project implementation.