COCHIN SHIPYARD LIMITED(IPO)

COMPANY OVERVIEW

Cochin Shipyard Limited is the largest public sector shipyard in India in terms of dock capacity, as of March 31, 2015, according to the CRISIL Report. They cater to clients engaged in the defence sector in India and clients engaged in the commercial sector worldwide. In addition to shipbuilding and ship repair, they also offer marine engineering training.

Cochin Shipyard’s shipbuilding activities include the construction of vessels for clients operating in the defence and in the commercial sector shipping industry. In addition to shipbuilding and ship repair, they also offers marine engineering training programs as well as offer additional courses, including six months practical training for marine engineering students from colleges affiliated to universities, fire prevention and firefighting, and elementary first aid training through its marine engineering training institute; and chemical, mechanical, and non-destructive testing services of metals, welds, and alloys.

They have built and delivered vessels across broad class ifications including bulk carriers, tankers, Platform Supply Vessels (“PSVs”), Anchor Handling Tug Supply vessels (“AHTSs”), barges, bollard pull tugs, passenger vessels and Fast Patrol Vessels (“FPVs ”). They are currently building India’s first Indigenous Aircraft Carrier (“IAC”) for the Indian Navy.

ISSUE OBJECTS

Utilisation of Net proceeds is proposed to be for following purposes:

• Setting up of a new dry dock within the existing premises of the Company (“Dry       Dock”);

• Setting up of an international ship repair facility at Cochin Port Trust area (“ISRF”); and

• General corporate purposes.

ISSUE DETAILS 

• Issue Open    :   01st August, 2017
• Issue Closes  :   03rd August, 2017
• Issue Type     :   Book Built Issue IPO
• Issue Size       :   Fresh Issue of 22,656,000 Equity Shares & OFS of 11,328,000                                   Equity Shares
• Face Value     :   Rs 10/ Equity Shares
• Issue Price     :   Rs.424 – Rs.432/ Equity Share
• Valuation       :   1500 Cr.(Approx.)
• Market Lot    :    30 Shares 
• Minimum Order Quantity: 30 Shares and in multiples
• Listing At       :    BSE, NSE

*Additional Discount of Rs 21 is offered to RII and Employee. Discounted price band is Rs 403 – Rs 411 for Retail and Employee.

INDIAN SHIPBUILDING INDUSTRY

The Indian commercial fleet saw an addition of 42 vessels with approximately 0.2 million GRT in 2015. In 2015, India’s total fleet strength was 1,246 vessels with a GRT of 10.51 million. The majority of the Indian fleet is deployed for costal trade, with approximately 70% of the registered vessels used for coastal trade, while the remaining 373 vessels are engaged in overseas trade. However, in tonnage terms, the fleet deployed for coastal trade is approximately 1.5 million GRT, while that for overseas trade is approximately 9 million GRT.

VALUATIONS

As far as Valuations are concerned the IPO is cheaply priced with a P/E of 15.67x  at the upper price band and 15.38x on lower price band on consolidated basis, and valuations remain the same on standalone basis as company has no subsidiaries. (Both Diluted as well as on Basic EPS basis).

#Alternatively if we see P/E on taking average EPS both on Consolidated as well as Standalone then we find it @18.47x & 18.13x respectively (Both @ Upper & Lower Price Band)

EARNINGS PER SHARE(EPS)

RoNW

PEERS COMPARISON

REVENUE FROM DIFFERENT ACTIVITIES

RESTATED SUMMARY STATEMENT OF ASSETS AND LIABILITIES

RESTATED SUMMARY STATEMENT OF PROFIT AND LOSS

ANALYSIS & SUBSCRIPTION SUGGESTIONS BY AUTHOR

Well fellas after HUDCO IPO we again have been given a chance to grab an excellent opportunity to land our money safely not only being a long term investor but also as a short term trader to get some good bugs on listing gains.

Cochin Shipyard IPO gives us chance to grab an excellent opportunity. We have multiple reasons to go for this IPO in which we are mentioning few of them:

1. Cochin Shipyard Limited: It is one of the largest public sector shipyard in India in terms of dock capacity,

2. Excellent Valuations: As it is Valued @just 18.47x PE @ upper price band which seems to an eye catcher for me from here onwards even if the price increases to more than 70% then I would say its perfectly Valued, so what we are getting here is much cheaper than what should have been the price,

3. Peers Comparison: This is the only listed company(After Listing) which will exist in market in profits even today its already listed peers almost all have negative EPS. This makes me curious,

4. Benchmark Projects: CSL is currently developing India’s first Indigenous Aircraft Carrier (IAC). Order book of Rs.30 bn and bid pipeline of Rs.120 bn will provide strong revenue visibility over coming years,

5. CAGR: CSL over the past 3 financial years has reported strong numbers giving a CAGR of 14 percent.

We still have lot of things in the company but All we can say is we give “MUST SUBSCRIBE” to this IPO.

Disclaimer: Author may or may not have interest in the issue, before getting to conclusion consult your Financial Adviser. The Author shall not be responsible for any kind of loss of gain arising out of any investments.