Synopsis:
Cochin Shipyard plunged heavily after reporting a weak Q2. Revenue dipped 2% YoY while expenses rose 12%, pulling net profit down 43% to Rs 108 crore. Shipbuilding revenue fell 12% YoY and margins weakened sharply, with OPM at 15% and NPM at 10%. Higher costs and softer execution hit overall performance.
The shares of this leading player engaged in the construction of all kinds of vessels, repairs and refits of all types of vessels, including periodic upgradation and life extension of ships, are in focus after reporting a weak Q2. In this article, we will dive more into the details.
With a market capitalization of Rs 45,197 crore, the shares of Cochin Shipyard Ltd reached a day’s low of Rs 1,645.20 per share, down 8 percent from its previous day’s closing price of Rs 1,792.05 per share. Over the past five years, the stock has delivered a robust return of 912 percent, outperforming NIFTY 50’s return of 104 percent.
Q2 Highlights
Cochin Shipyard reported a core revenue of Rs 1,119 crore in Q2 FY26, a decline of 2 percent as compared to Rs 1,143 crore in Q2 FY25. However, on a quarter-on-quarter basis, it grew by 5 percent from Rs 1,069 crore.
On the expenses front, it reported total expenses of Rs 1,096 crore in Q2 FY26, a growth of 12 percent as compared to Rs 981 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it grew by 25 percent from Rs 873 crore.
Regarding its profitability, it reported a net profit of Rs 108 crore in Q2 FY26, a decline of 43 percent as compared to Rs 189 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it recorded a decline of 43 percent from Rs 188 crore. The main reason behind this lower profitability is because of lower sales and higher expenses growth during the same period.
Additionally, Cochin Shipyard has declared an interim dividend of Rs 4 per equity share, which is 80 percent value of face value of Rs 5 and has fixed Tuesday, November 18, 2025 as the Record Date for determining eligible shareholders for the same.
Coming to its segmental highlights, in Q2 FY26, the shipbuilding division went through a tough time with only a revenue of Rs 760 crore, which is 12 percent less compared to the same period last year (Rs 860 crore), but it increased by 73 percent from Rs 440 crore from its previous quarter.
The ship repair segment has been very responsive, achieving a revenue of Rs 360 crore, which is 27 percent higher than that in the same period last year (Rs 283 crore); however, it is 43 percent lower compared to the previous quarter due to an extremely high base of Rs 630 crore in Q1. The unallocated revenue was Rs 127 crore, with a 26 percent increase compared to the same period last year (Rs 101 crore) and a 134 percent rise from Rs 54 crore.
Ratio Analysis
Cochin Shipyard’s financial ratios reflect a visible easing of its performance in Q2 FY26. The Debt-to-Equity ratio went up to 0.10x from 0.00x a year ago, showing that the company has taken on some borrowings after a period when it was debt-free. The Debt Service Coverage Ratio (DSCR) dropped drastically to 5.96x from 14.57x, indicating that the cash-flow buffer for meeting debt obligations has been significantly reduced. In the same way, the Interest Service Coverage Ratio (ISCR) has gone down to 6.40x, a dramatic drop from 17.74x last year, thus pointing out that earnings available for interest costs are lower than before and that the company is still able to meet them with ease.
On the profitability side, the company also saw a significant decrease in its profit margins. Operating Profit Margin declined by 900 bps to 15 percent in Q2 FY26 from 24 percent in the previous year, which was influenced by the change in the revenue mix and the lower operating leverage. Net Profit Margin also declined by 700 bps, reaching 10 percent from 17 percent during the same period, last year, which is a reflection of the combination of weaker operating performance and higher financing costs.
Cochin Shipyard Limited is a Public Sector Undertaking (PSU) company that is engaged in the shipbuilding and ship repair business. The Company is engaged in the construction of vessels and repairs and refits of all types of vessels, including upgradation of ships, periodical layup repairs, and life extension of ships
Written by Satyajeet Mukherjee
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