In recent times, the shipping stocks have been in focus, followed by the announcement of Rs. 70,000 crore maritime schemes to regain India’s maritime power. Keeping this in focus, let’s talk about one of the leading Miniratna PSU companies that specialises in shipbuilding and ship repair for both commercial and defence sectors.
It builds a wide range of vessels, including cargo ships, offshore support vessels, and advanced warships like aircraft carriers. In this article, we will explore where the company earns more revenue, whether it is from defence or commercial shipbuilding.
With a market capitalization of Rs.49,110.60 crores on Monday, the shares of Cochin Shipyard Ltd jumped upto 1.07 percent, making a high of Rs. 1893.70 per share compared to its previous closing price of Rs. 1873.50 per share.
Cochin Shipyard Ltd at a glance
Cochin Shipyard Limited (CSL) was incorporated in 1972 as a fully owned Government of India company. Over the past three decades, it has emerged as a leader in India’s shipbuilding and ship repair industry.
The company offers a range of products and services, including shipbuilding, ship repair, and marine engineering training, with a strong focus on self-reliance and strategic defence manufacturing.
The yard has the capacity to build ships up to 1,10,000 DWT and repair vessels up to 1,25,000 DWT, making it capable of handling the largest ships in the country. CSL has delivered two of India’s largest double-hull Aframax tankers, each with a capacity of 95,000 DWT.
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It has also secured shipbuilding orders from internationally renowned clients in Europe and the Middle East, and has been nominated to build India’s first indigenous Air Defence Ship. CSL began its ship repair operations in 1982 and has since undertaken a wide range of projects, including the upgradation and life extension of ships for the Navy, UTL, Coast Guard, Fisheries, and Port Trusts, as well as merchant vessels for SCI and ONGC.
The yard has developed strong capabilities in handling complex and technologically advanced repair jobs. Additionally, CSL runs a training program for graduate engineers, equipping 100 students annually with marine engineering skills to serve as 5th Engineers on Indian and foreign vessels.
Revenue Mix
In the first quarter of FY 26, the company’s shipbuilding revenue stood at Rs. 347.80 crore, showing a 25% decline compared to Rs. 465.07 crore in the same quarter of FY 25. This indicates a slowdown in the shipbuilding segment over the period.
Along with it, the ship repair segment witnessed a significant increase in revenue, rising by 157% from Rs. 244.78 crore in Q1 FY 25 to Rs. 629.62 crore in Q1FY 26. This sharp growth highlights the stronger performance and higher demand in the ship repair business during the quarter.
Order Book Segmentation
The company’s order book stands at approximately Rs. 21,100 crores, reflecting a healthy position with clear visibility of future revenue.
The company has received a total of 75 vessel orders amounting to Rs. 19,600 crore. Out of these, the Defence category accounts for 14 vessels with an order value of Rs. 13,700 crore. In the Commercial – Domestic category, there are 34 vessels with an order value of Rs. 1,700 crore, while the Commercial – Export category includes 27 vessels worth Rs. 4,200 crore. Additionally, ship repair orders of approximately Rs. 1,500 crore have also been secured, bringing the overall order book position to ~Rs. 21,100 crore.
The total order book position comprises 65% from Defence, 8% from Commercial – Domestic, 20% from Commercial – Export, and 7% from Ship Repair. The Defence contributes 65% and the overall Commercial Shipbuilding contributes 28% and the rest comes from Ship Repair.
Order Pipeline
The Shipbuilding Order Pipeline is approximately Rs. 2,85,000 crore, which is 13.5 times more than the current position. Out of this, Defence forms the major share with 77%, amounting to about Rs. 2,20,000 crore, while the Commercial segment contributes 23%, valued at around Rs. 65,000 crore.
This shows that most of the expected orders are for Defence projects, which indicates a strong focus on meeting national security needs. At the same time, the Commercial segment also adds a good share, helping to keep the order pipeline well-balanced.
In the Defence segment, the order pipeline is spread across different stages. About 59% (Rs. 1,29,750 crore) is at the RFI stage, 37% (Rs. 80,000 crore) at the expected RFI stage, 4% (Rs. 9,500 crore) at the bid submitted stage, and a very small portion (Rs. 750 crore) at the RFP stage.
For the Commercial segment, the pipeline is divided between the Domestic and International markets. Domestic contributes 62% (Rs. 40,000 crore), while International makes up 38% (Rs. 25,000 crore).
The order book provides a clear view of the company’s future revenue potential. Based on the order pipeline, the majority of the revenue is expected to come from Defence projects, while Commercial shipbuilding contributes a comparatively smaller share.
Financials & Others
The company’s revenue rose by 37.70 percent from Rs. 710 crore to Rs. 977 crore in Q1FY25-26. Meanwhile, the Net profit rose from Rs. 181 crore to Rs. 188 crore during the same period.
The company has a Return on Capital Employed (ROCE) of 20.4% and a Return on Equity (ROE) of 15.8%, reflecting strong profitability, with a low debt-to-equity ratio of 0.09, indicating that the company is almost debt-free.
Additionally, the company offers a dividend yield of 0.52% and has been consistently maintaining a healthy dividend payout ratio of 42.9%, showcasing its commitment to rewarding shareholders.
Conclusion
Cochin Shipyard earns most of its money from Defence rather than Commercial shipbuilding. The order book, which provides a clear view of the company’s future revenue potential, shows that Defence dominates with the largest share of both current and future orders. While Commercial shipbuilding, including domestic and international projects, contributes a smaller but steady share, hereby, Defence remains the company’s core driver of company’s growth.
Written by Sridhar J
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