Cochin Shipyard shares dropped 2% on October 17, extending their downward trend as the company’s Offer for Sale (OFS) opened for retail investors.
“Cochin Shipyard OFS Opens for Retail Investors: Should You Bet or Avoid?”
OFS Alert: Cochin Shipyard Shares Fall 2% as Government Launches Sale
Cochin Shipyard shares continued to decline for the second consecutive session, falling by 2% during intraday trading on Thursday, October 17, as the company’s Offer for Sale (OFS) opened for retail investors. The OFS had already opened for non-retail investors on October 16. The stock opened at ₹1,559.55, down from its previous close of ₹1,588.50, and dropped further to ₹1,558. By around 12:50 pm, Cochin Shipyard shares were trading 1.5% lower at ₹1,565.
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Cochin Shipyard Shares Decline as Government Sells 5% Stake in OFS
The government plans to sell a 5% stake in Cochin Shipyard through the Offer for Sale (OFS) at a floor price of ₹1,540 per share. The government sold up to 65,77,020 shares, representing 2.50% of Cochin Shipyard’s total paid-up equity share capital, on October 16, and is offering an equal number of shares for sale on October 17.
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Cochin Shipyard OFS: Institutional Investors Bid Over ₹1,900 Crore
Meanwhile, a PTI report stated that the Offer for Sale (OFS) received bids exceeding ₹1,900 crore from institutional investors on Wednesday. Institutional investors oversubscribed the shares reserved for them, with bids for 1.28 crore shares compared to the 59.19 lakh shares offered. The indicative price for these bids was ₹1,550.13 per share, according to PTI.
Should You Bet?
Mint reached out to several experts for their insights on whether investing in the Offer for Sale (OFS) is a wise decision. Here’s what they had to say:
Sagar Shetty, Research Analyst, StoxBox:
Cochin Shipyard has a robust order book of ₹22,500 crore, with a substantial portion of revenue coming from the defense sector. This solid order book provides strong revenue visibility in the coming quarters, while its healthy pipeline indicates a consistent flow of potential business opportunities.
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Cochin Shipyard’s impressive performance is evident in its share price, with the company generating over 200% returns in just one year. This remarkable growth underscores the company’s strong appeal among investors.
Understanding Cochin Shipyard’s 5% Stake Sale Amid Market Volatility
Following the Offer for Sale (OFS), the government plans to sell up to a 5% stake. Currently, the shares are trading at a discount, suggesting some volatility in the market.
While the company boasts solid fundamentals and a robust order book, it’s crucial for retail investors to carefully assess their risk tolerance and investment horizon before making any investment decisions.
Ajit Mishra, SVP-Research, Religare Broking:
Cochin Shipyard has undergone a correction over the past three months after a significant surge. The stock has fallen approximately 45% from its all-time high and is currently trading close to its long-term moving average, specifically the 200-day exponential moving average (DEMA).
If the decline persists, the stock has immediate support at the ₹1,500 level, with the next support around ₹1,350. Investors are advised to wait for a recovery and sustained trading above ₹1,850 before considering any new long positions.
Athin Kaithavalappil, AVP Institutional Research, Choice Broking:
The Offer for Sale (OFS) initiated by the government regarding Cochin Shipyard benefits not only the state but also investors who missed the initial surge. The current valuation, with a price-to-earnings (P/E) ratio of 50, is realistic for the government’s divestment. Long-term investors can capitalize on the company’s strong fundamentals, solid order book, and good market visibility.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart:
Cochin Shipyard Ltd., one of India’s leading shipbuilding and maintenance firms, has made a 5% stake available for purchase at a minimum price of ₹1,540 per share. This presents investors with a rare opportunity to acquire shares in a reputable public sector enterprise (PSU) at a competitive price through this OFS. Known for its strong finances and backing from the government, Cochin Shipyard offers multiple potential benefits.
The shares may be available at a discount to market prices due to the floor price of ₹1,540, creating an opportunity for value purchasing. Additionally, by assisting the government in reducing its ownership, the OFS could enhance the company’s market liquidity.
