Cochin Shipyard shares slip 3% as defence rally pauses after geopolitical-fuelled surge

Synopsis

Cochin Shipyard shares declined, mirroring a broader retreat in defence stocks after a rally fueled by geopolitical tensions. Investors booked profits following a sharp run-up in recent sessions, impacting other defence companies like Garden Reach Shipbuilders.

Shares of Cochin Shipyard fell as much as 3% on Friday to Rs 1,546 on the BSE, extending losses from earlier this week as defence stocks retreated following a sharp rally driven by heightened geopolitical tensions.

Cochin Shipyard shares had already slipped 2.55% on April 30 amid a broader market correction and profit-taking across defence counters. Friday’s move came as other defence stocks such as Garden Reach Shipbuilders & Engineers and Data Patterns fell up to 5%, with investors continuing to book gains after a sharp run-up in recent sessions.

Defence stocks have been in focus on Dalal Street following rising geopolitical risks, particularly after the April 22 terror attack in Pahalgam that killed 26 civilians. This prompted strong rhetoric from Indian and Pakistani leadership and expectations of increased defence spending, both domestically and globally.

On April 30, shares of Hindustan Aeronautics, GRSE, Data Patterns, Cochin Shipyard, Bharat Electronics, and Mazagon Dock Shipbuilders dropped up to 5% after two strong sessions of gains earlier in the week. The pullback followed a sharp two-day rally led by Paras Defence, which surged 28% before bucking the trend again with a 5% gain on Wednesday.

Despite recent volatility, Cochin Shipyard maintains a strong order book and relatively lower valuation compared to its peers. The stock has risen 19.5% over the past year, 12% in the past month, and 5.4% over the past week.

Incorporated in 1972, the government of India holds a 72.9% stake in the company. Cochin Shipyard is one of the country’s leading shipbuilding and repair firms, known for constructing and maintaining major vessels, including the indigenous aircraft carrier ‘INS Vikrant’. It derives 73% of its revenue from shipbuilding, with the remainder from ship repair.

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The company has global partnerships with firms such as Rolls-Royce Marine (Norway), GTT (France), Vard Group (Norway), and others.

Technically, the stock is trading below its 200-day simple moving average, one of the eight key SMA levels closely tracked by market participants. The 14-day Relative Strength Index (RSI) stands at 63, indicating the stock is neither overbought nor oversold.

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