Cochin Shipyard (CSL) shares are trading at a 13% discount from their 52-week high on the NSE and have been on a declining curve over the past six trading sessions. Yet, the momentum is not lost and the stock could gain up to 30% from current levels, as momentum remains intact on the technical charts, suggest analysts.
Cochin Shipyard shares hit their 52-week high of Rs 1258.50 on September 8 and since then they have seen corrections in six successive trading sessions on the closing price basis as investors have looked to book profits after a big rally in an otherwise buoyant stock markets. Multibagger Cochin Shipyard’s past one-year journey reveals a 170% uptick in the stock price which is nearly 12-fold over the returns given by Nifty50 during this period. On a year-to-date basis, the gains are to the tune of 105%.
The PSU stock is currently trading above seven out of its eight Simple Moving Averages (SMAs) with six in nine oscillators trending in the bullish zone, according to Trendlyne data.
Rajesh Palviya, Senior Vice President, Technical and Derivatives Research at Axis Securities said that Cochin Shipyard shares are trading with a strong uptrend, forming a series of higher tops and bottoms across all the time frames, indicating bullish sentiments.
On the weekly chart, the stock has also witnessed breakout from the rounding bottom formation which supports bullish sentiments, he said adding that the past couple of months have seen stock trading with rising volumes which signifies increased participation of the bulls.
“The stock is well placed above its 20, 50, 100 and 200-day SMAs, which reconfirms a strong uptrend. On the quarterly chart, the stock has witnessed a multi-year breakout around Rs 630 levels which confirms the positive bias. Meanwhile, the weekly and monthly band bollinger buy signal shows rising momentum,” the Axis Securities analyst added.
Not ruling out corrections in the short-term timeframe, Palviya advised investors to use these “shallow corrections” towards Rs 960-900 as buying zones. He puts support at these levels while recommending an accumulation strategy. “We believe this momentum may extend towards Rs 1,300-1,450 levels in upcoming months,” he emphasised.
Analyst Nilesh Jain, Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking puts the price target at Rs 1,250, amid a strong uptrend in Cochin Shipyard shares over the past one year.
He said that chart structure is still quite strong but a consolidation cannot be ruled out as the stock was currently moving in an overbought territory. He places the support at Rs 1,040.
Friday’s MFI at 85 suggests that the counter is in a strongly overbought zone meanwhile momentum indicator RSI of 66 indicates that the Cochin Shipyard is hovering near the overbought zone. Both MFI and RSI are considered overbought above 70.
Investors should also be mindful of the volatility in the stock as it has been trading with a 1-year beta of 1.5.
Fundamental View
Market expert Kranthi Bathini, who is Director-Equity Strategy at WealthMills Securities called Cochin Shipyard a buy-on-dip candidate and one of his preferred picks in the defense space. He sees a 15-20% uptick in prices over the next 12 months.
Cochin Shipyard is one of the outperformers in the market and the stock has doubled in the past one year riding on the ongoing momentum in the defense stocks. “The growing order book and earnings visibility will drive the stock further up in the medium to long term. The government’s focus on defence has been quite strong. Also, its plans to induct one more aircraft carrier augurs well for the company and prospects of the stock,” Bathini said.
The company reported a 12.7% year-on-year growth in its June quarter revenue at Rs 559.95 versus Rs 496.77 crore reported by it in the year-ago period. The net profit for the said quarter stood at Rs 98.65, which was up 133% YoY from Rs 42.18 crore reported by it in the year-ago period.
Cochin Shipyard’s order book position as on March 2023 stood at Rs 21,400 crore.
The company has announced a dividend of Rs 3, the ex-date of which is Thursday, September 21, 2023. Prior to this, it has given dividends on 12 occasions.
According to Trendlyne, the trailing 12-month PE stands at 39.68 with a price-to-book (PB) value at 3.24.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
