Cochin Shipyard slumps as FY27 EBITDA margin guidance disappoints

Cochin Shipyard slumped 9.07% to Rs 1,382.50 after the company's FY27 EBITDA margin guidance of around 14% disappointed investors.

During an analyst call on Thursday, the company guided for FY27 revenue growth of 12%, with potential to reach 15%. However, it expects the EBITDA margin to stabilise at around 14% in FY27, compared with 24% in FY26.

Cochin Shipyard expects shipbuilding margins to settle at 10%-12%, while ship repair margins are expected to be at 22%-24%. The company expects its revenue mix to comprise around 70% shipbuilding and 30% ship repair going forward.

The company delivered three vessels during the quarter, while its wholly owned subsidiary Udupi Cochin Shipyard also delivered three vessels. Management is targeting the delivery of 10 vessels in FY27.

Cochin Shipyard's unexecuted order book stood at around Rs 21,900 crore. The order book comprised Rs 11,900 crore of defence orders, Rs 1,600 crore of domestic commercial orders, Rs 7,200 crore of commercial export orders and Rs 1,200 crore of ship repair orders.

The company has been declared L1 for five Next Generation Survey Vessels for the Indian Navy, with an estimated value of around Rs 5,000 crore.

Cochin Shipyard's defence opportunity pipeline includes four Landing Platform Docks, 12 Mine Counter Measure Vessels and seven P17 Bravo vessels. The combined potential value of these programmes is estimated at more than Rs 1.17 lakh crore, based on the management update.

Cochin Shipyard reported a 19.38% decline in consolidated net profit to Rs 151.45 crore on a 2.40% increase in revenue from operations to Rs 1,094.21 crore in Q1 FY27 over Q1 FY26. EBITDA stood at Rs 260 crore, with an EBITDA margin of 24%, while the PAT margin stood at 14%.

Separately, the company has approved a 50:50 joint venture with Drydocks World Dubai, a DP World company, for the Kochi International Ship Repair Facility. The ISRF will be transferred to the JV for Rs 1,800 crore, with Cochin Shipyard receiving Rs 900 crore in cash and Rs 900 crore through equity shares in the JV. The transaction remains subject to necessary approvals.

Cochin Shipyard is a leading player in the construction of all kinds of vessels and the repair and refit of all types of vessels, including periodic upgrades and life extensions of ships.

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