The stock of Pipavav Defence and Offshore Engineering Ltd has been on the decline in the last 15 days despite the company bagging an order worth ₹221 crore from the Ministry of Defence for construction of a training ship for the Indian Coast Guard. The training ship is intended to provide basic sea training to all Coast Guard personnel.

The stock has been declining continuously in the last 13 days and lost 17 per cent at ₹37.70. On Wednesday, the stock plummeted 4.97 per cent to close at 37.30.

The stock declined almost vertically from its 52-week high of ₹91.75, registered on February 1, 2013.

However, institutional holdings — FIIs and domestic funds — remain steady at 2.25 per cent and 15.25 per cent respectively, in the last few quarters.

Analysts said margins continue to remain under pressure due to increased raw material cost. According to them, as the commercial order book execution remains under a cloud, it is better to remain cautious about the financial performance of Pipavav Defence.

Kotak Securities expects the company’s net profit for the third quarter at ₹3.6 crore, down from ₹10 crore reported during the same period last year.

“We expect Pipavav’s third quarter revenues to increase about 28 per cent year-on-year but decrease about 2 per cent quarter-on-quarter at ₹795 crore on the back of strong order book of ₹12,000 crore and also due to increased trading revenues,” Kotak said. The brokerage has set a target price of ₹45 on the stock.

The company is planning to raise around $150 million through a listing on the London Stock Exchange or a strategic stake sale by March.

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