COCHINSHIP - Cochin Shipyard Limited Share Price

Management Outlook:
Cochin Shipyard Limited (CSL) projects a 20-25% revenue growth for FY25, driven by strong order execution in shipbuilding and ship repair. While EBITDA margins are expected to remain stable at 17-19%, higher depreciation from new infrastructure (INR 125"“150 crores annually) may moderate PAT. The company emphasizes sustainable growth through defense contracts, international orders, and green vessel innovation.

Major Points:

1. Order Book & Contracts:

   • Unexecuted Orders: ~INR 22,000 crores (INR 15,000 crores defense, INR 7,000 crores commercial).
   • Recent wins include Hybrid SOVs (INR 1,000"“1,200 crores), tug orders via subsidiaries (INR 250"“300 crores), and naval refits (INR 150 crores).
   • Secured MSRA with U.S. Navy, enabling repairs for U.S. vessels.

2. Operational Milestones:

   • New dry dock and International Ship Repair Facility (ISRF) to be fully operational by August 2024, enhancing capacity.
   • Delivered India's first indigenously built Hydrogen Fuel Cell Vessel and hybrid-electric catamarans for Kochi Water Metro.

3. Financial Performance:

   • FY24 consolidated turnover: INR 3,830 crores (+62% YoY), PAT: INR 783 crores (+157% YoY).
   • Ship repair revenue crossed INR 1,000 crores; subsidiaries (UCSL, HCSL) turned profitable with INR 800 crores and INR 150 crores order books, respectively.

4. Strategic Focus:

   • Expanding in green maritime solutions (hybrid/electric vessels, hydrogen tech) and global markets (Europe).
   • Targeting defense projects (e.g., ASW-SWC corvettes) and commercial opportunities (port tugs, autonomous vessels).

5. Challenges:

   • Depreciation from INR 2,769 crore capex (dry dock, ISRF) to impact FY25 profitability.
   • Prudent order selection in international markets to balance growth and risk.

Question 1:
Deepak Krishnan (Kotak Institutional Equities): "You said EBITDA margins will be in the range of previous guidance. So does that imply closer to 18%"“19% on an annual basis? Factors driving high EBITDA margins this quarter"”ship repair contracts and IAC-1? Any one-offs?"

Answer:
The 18"“19% EBITDA margin guidance remains valid. High margins in Q4 were driven by strong execution in ship repair (including naval refits) and shipbuilding (notably IAC revenue), with no one-offs.

Question 2:
Umesh Raut (Nomura): "What are key future order prospects for shipbuilding/repair? How will new facilities (ISRF, dry dock) impact revenue and margins?"

Answer:
Order pipeline includes naval refits, hybrid SOVs (Europe), and green tugs. ISRF and dry dock (operational by August 2024) will enhance capacity. Ship repair margins guided at 22"“23%; consolidated EBITDA at 17"“19%.

Question 3:
Pritam (Wealth Way): "What is the opportunity for green vessels (hybrid, zero-emission)? How does CSL compete with global players amid EU decarbonization policies?"

Answer:
CSL is positioned strongly in Europe for hybrid SOVs and domestically for green tugs. Partnerships and collaborations ensure competitiveness. Bengal and others are exploring water metro projects, offering replication potential.

Question 4:
Viraj (Jupiter Finance): "How will 20"“25% revenue growth and higher depreciation impact PAT? What drives confidence in growth?"

Answer:
Growth is backed by a robust order book (Rs.22,000 crore). Depreciation from new facilities (Rs.125"“150 crore annually) will temper PAT, but EBITDA sustainability and execution momentum support guidance.

Question 5:
Sagar Gandhi (Invesco Mutual Fund): "When will IAC-2 materialize? Will FY25"“26 revenue peak without it?"

Answer:
IAC-2 timelines depend on government decisions. Growth is sustainable via defense (ASW-SWC, NGMV) and export orders, ensuring a strong outlook even without IAC-2.

Question 6:
Dhiraj (Samvad Financial): "What R&D/IP initiatives is CSL undertaking?"

Answer:
C-SAS division drives innovation (e.g., hydrogen fuel cell vessels, autonomous vessels). Collaborations with DRDO, IITs, and startups aim to build indigenous capabilities, though IP disclosures remain limited.

Question 7:
Gagan (ASK Investments): "What fixed asset turnover is expected from new facilities? How will partnerships for ISRF work?"

Answer:
New facilities (Rs.2,800 crore capex) aim for ~2x asset turnover at peak. ISRF's global operational partner (via tender) will enhance efficiency and supply chain access, targeting global benchmarks.

Question 8:
Deepak Krishnan (Kotak): "What is the execution timeline for a potential IAC-2 order?"

Answer:
If awarded, IAC-2 would follow Vikrant's 8"“10-year timeline. Updates depend on post-election government decisions.

Question 9:
Umesh Raut (Nomura): "Why did inventory days rise? Will advances decline?"

Answer:
Inventory increased due to ASW-SWC and NGMV material procurement. Advances will reduce as projects progress, reflecting execution milestones.

Question 10:
Vivek (Shanti Financial): "Breakdown of Rs.22,000 crore order book?"

Answer:
Order book: ~Rs.15,000 crore defense (warships, carriers), ~Rs.7,000 crore commercial (hybrid SOVs, tugs). Ship repair order book at Rs.1,250 crore (vs. historical Rs.600"“700 crore). Details in post-call presentation.