COCHINSHIP - Cochin Shipyard Limited Share Price

In the conference call for Cochin Shipyard Limited's Q1 FY26 results, management provided an optimistic outlook, focusing on several growth initiatives and financial achievements. The company reported a turnover of Rs.1,068.59 crores, a significant rise from Rs.771.47 crores in Q1 FY25. The profit before tax also increased to Rs.249.54 crores from Rs.235.82 crores, while profit after tax rose to Rs.187.82 crores compared to Rs.174.23 crores in the prior year. The EBITDA margin stood at 28% and the PAT margin at 18%.

Management emphasized a robust order book of approximately Rs.21,100 crores, with a shipbuilding order book of Rs.19,600 crores, encompassing 75 vessels at various stages of production. Additionally, CSL highlighted collaborations through MoUs with industry leaders such as Drydocks World UAE and HD KSOE of South Korea, aimed at enhancing ship repair capabilities and shipbuilding productivity, which aligns with the Maritime India Vision 2030.

Looking forward, the management guided a top-line growth of 14%-15% for FY26 and a PAT margin target of 15%. They disclosed plans to leverage the newly operational International Ship Repair Facility (ISRF) and a 310-meter dry dock, aiming for an anticipated revenue from ISRF of around Rs.250 crores in the first 18-24 months, scaling up to Rs.600 crores thereafter. Management expects continued solid financial performance, although they indicated that margins may normalize due to a lack of large-scale repairs similar to previous years.

1. Question: "Are you planning to build a full digital shipyard model with AI and smart sensors to reduce build time?"
   Answer: We will invest in modern systems, especially on the engineering side, but we are not moving into a fully smart shipyard model. We will adopt technology selectively where required.

2. Question: "How do you decide where to invest, balancing short-term profits with long-term growth?"
   Answer: We have a long-term plan aligned with our 2030 and 2047 goals. Investment priorities are set based on sector merits, ensuring a balance between innovation and profitability.

3. Question: "What stage are we at with the HD KSOE and Drydocks partnerships and their potential revenue?"
   Answer: The engagement with HD KSOE focuses on merchant shipbuilding through our new dry dock, aiming for a comprehensive long-term cooperation. Initial revenue will mature in 3-5 years; specifics are yet to be defined.

4. Question: "What is the status of the defense order pipeline and IAC-2 developments?"
   Answer: There's a robust pipeline with projects in various bidding stages. However, there are no significant updates on IAC-2 at this time.

5. Question: "What are the margin expectations for the ship repair and shipbuilding segments this year?"
   Answer: We expect ship repair margins to be lower than last year's peak due to the absence of large projects like aircraft carriers, projecting around Rs.1,500 crores in revenue; shipbuilding margins are typically around 10-12%.

6. Question: "Will there be further CAPEX needed for the new JVs with HD KSOE and Drydocks?"
   Answer: Yes, HD KSOE will involve CAPEX for new facilities, while Drydocks won't require further investment initially as we expand existing capabilities.

7. Question: "What growth do you expect in FY26?"
   Answer: We anticipate a revenue growth of approximately 14-15% for FY26, supported by our strong order book.

8. Question: "What are your utilization rates for the new dry dock and ISRF?"
   Answer: Currently, 14 ships are being repaired at ISRF, which has a capacity of 82 vessels annually. The new dry dock is also in use but we cannot specify a utilization percentage currently.

9. Question: "How will the Maritime Development Fund impact future projects?"
   Answer: The fund is designed to support shipbuilding and maritime ventures but specifics are not yet clear. We're considering how to integrate it into our financial plans.

10. Question: "What profitability profile do you see between domestic and export orders?"

Answer: We regularly assess profitability through detailed financial metrics. Exports are a strategic focus, especially in collaboration with global partners, enhancing overall operational prospects.