Cochin Shipyard shares plunge over 13% after a relentless rally; should you buy, sell or hold?

Shares of Cochin Shipyard, a fully-owned Government of India company, nosedived over 13 per cent in the opening session on Tuesday, September 12. The stock was trading at Rs 1,041.05 at 9:52 am, down by 13.54 per cent from the previous close. The scrip had closed at Rs 1204.04 in the last trading session.

The sudden fall in the share price of the company comes after days of continuous rise. The stock had hit a 52-week high of Rs 1,258 on Friday i.e. September 8, 2023.

Earlier on Monday, brokerage house Kotak Institutional Equities downgraded its rating on shares of Cochin Shipyard to ' sell' from 'buy'. The brokerage firm has set the target price of Rs 990 for the scrip. The stock has been among the top performers in the mid and small-cap stocks in the past six months and has made investors wealthier by 157 per cent in the same period.

Similarly, the stock has yielded a positive return of over 106 per cent so far this year and over 181 per cent in the last one year.

Cochin Shipyard was incorporated in 1972. In the last three decades, it has emerged as a forerunner in the Indian shipbuilding and ship repair industry. The company's market capitalisation stood at Rs 14,516 crore on the BSE at the time of writing this report.

Cochin Shipyard has acquired expertise in manufacturing indigenous aircraft carriers (IAC). Just like INS Vikrant, Cochin Shipyard is expected to build a third aircraft carrier for India. Also, it recently got an order worth Rs 1,050 crore from Pelagic Wind Services (PWS).

Earlier, the Ministry of Defence signed a contract worth Rs 9,805 crore with Cochin Shipyard for the procurement of six Next Generation Missile Vessels (NGMVs) for the Indian Navy. According to ICICI Direct Research, the first vessel is to be delivered in 48 months, while the last is to be delivered within 108 months. The vessels would be heavily armed war vessels incorporating stealth, high speed, and offensive capability. The primary role of the ships would be to provide offensive capability against enemy warships, merchantmen, and land targets.