Cochin Shipyard shares rally over 8% on NATO defence push, stock up 32% in 4 days
Cochin Shipyard's Rising Momentum
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Shares of Cochin Shipyard climbed as much as 8.4% on Friday to Rs 2,547.25 on BSE, extending a sharp rally in defence-linked stocks after a call by the U.S. for NATO members to significantly raise their defence spending. The stock has now gained 32.4% over four trading sessions, fueled by rising investor bets on India's naval build-up and the company's strong order book momentum.The latest boost in defence stocks came after NATO Secretary General Mark Rutte on Wednesday proposed that member states raise their defence spending to 3.5% of GDP. Although India is not a NATO member, it maintains bilateral defence and strategic ties with several NATO nations, including the U.S., France, and the U.K., raising expectations that Indian defence companies could indirectly benefit from increased demand for equipment and support systems.Dutch Defence Minister Ruben Brekelmans stated, 'We should spend at least 3.5% on defense, which in the Netherlands means an additional 16 to 19 billion euros (USD 18–22 billion) on top of our current budget.' NATO members are required to meet confidential "capability targets" across areas such as air defence systems, long-range missiles, drones, and artillery.Cochin Shipyard, India's largest public sector shipbuilder and a key supplier to the Indian Navy and Coast Guard, has delivered a staggering 737% return over the last two years. A constituent of the Nifty Midcap 150 index, the stock has surged 94.4% in the past three months and 24.4% in the past one month. Over a three-year period, the stock has returned 1,403%.During Friday's session, trading volumes surged alongside the price rally. Cochin Shipyard is now trading above all key moving averages — 5-day, 10-day, 20-day, 50-day, and 200-day SMAs — underscoring the strength of the uptrend. Technical indicators further highlight bullish sentiment: the Relative Strength Index (RSI) stands at 78.2 (overbought territory), while the MACD at 150.9 remains above the signal line.The company recently posted a 10.8% year-on-year rise in net profit to Rs 287 crore for the March quarter, while revenue increased 37% to Rs 1,758 crore. However, EBITDA declined 7.6% to Rs 266 crore and margins contracted sharply by 730 basis points to 15.10%, compared with 22.40% in the same quarter last year.Cochin Shipyard maintains a robust financial structure, with a Debt-to-Equity ratio of just 0.01 as of March 2025, marginally higher than 0.00 a year ago.Despite strong price momentum, analysts remain cautious. According to Trendlyne, the average target price for the stock is Rs 1,349, implying a potential downside of 47% from current levels. Of the three analysts tracking the stock, the consensus rating is 'Hold'.
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