Ship repair segment of Cochin Shipyard expects slow growth

The share price of the government-owned ship repair and construction company, Cochin Shipyard Ltd can be expected to take cues from the changed completion cycle of its ongoing projects in the ship repair segment.

During the first quarter, the company faced several issues, which were directly related to the completion of its projects. The management of the company mentioned that many of its suppliers invoked force majeure clause (which allows temporary relief from contractual obligations in uncertain & uncontrolled situations such as pandemic).

This resulted in zero operations of Mumbai ship repair unit due to the lack of material in the first quarter. In addition to this, the ship repair front business saw a few ship repair orders planned being cancelled or deferred. Even the ship owners reduced the scope of work due to liquidity issues. Such factors affected the financial performance of the company in the first quarter. In the Capex front also, both, International Ship Repair Facility (ISRF) and dry dock have been impacted adversely.

The ship repair segment has nearly Rs 500 crore of the order book. While the total order book stood at Rs 14,000 crore. Though, as its majority order inflow consists of defence orders, governments’ expenditure via Atmanirbhar Bharat initiative in defence would help it maintain the top-line.

On Tuesday, the stock price closed at Rs 357.25 per share down by half a per cent on BSE.