According to latest financial results released post-market hours, Cochin Shipyard reported a 19.4% year-on-year decline in consolidated net profit to ₹151.5 crore, compared with ₹188 crore in the corresponding quarter last year. On a sequential basis, the net profit came in lower as it declined by 37% from ₹211.2 crore in the March quarter. Revenue from operations showed a 2.3% YoY increase to ₹1,094 crore from ₹1,069 crore in Q1 FY26, as reported in the exchange filing. The decline in profitability was primarily driven by lower operating margins, with EBITDA falling 20.4% to ₹193 crore from ₹242 crore in the year-ago period, while the EBITDA margin contracted sharply to 17.6% from 22.7% a year earlier. Profit before tax declined 18.86% YoY to ₹202.49 crore in Q1 FY27, compared with ₹249.54 crore in the corresponding quarter last year.
The Kerala government has made a significant strategic move by leasing 18.16 acres of land to Cochin Shipyard for a major ship block building project involving an investment of ₹5,000 crore. As per Chief Minister V D Satheesan, the land is located at Ramanthuruth, near Kochi city, and will be leased for the project involving ship block construction. The government will receive an annual lease amount of ₹1.45 crore, with the annual revenue including GST estimated at around ₹1.70 crore. The project is expected to create around 2,000 direct jobs, with the land located on an island close to the city. The Chief Minister noted that the proposal had been pending for some time and was cleared after discussions with Cochin Shipyard, describing it as an important decision for the Central PSU. Describing the decision as an important one, Satheesan said the investment would bring large-scale employment and could also support further development opportunities in Kochi.
The shipbuilding business emerged as the key growth driver, with revenue rising 48% YoY while segment profit (PBIT) jumped significantly. In contrast, the ship-repair business witnessed a sharp decline, with revenue falling 38% YoY while segment profit declined substantially. This divergent performance across segments contributed significantly to the overall profit decline despite revenue growth, with the shipbuilding segment's strong performance offsetting the ship-repair business weakness. According to latest reports, the shipbuilding segment's revenue surged 59.5% YoY to ₹700.04 crore from ₹438.97 crore, while segment profit (PBIT) jumped 75.5% to ₹63.89 crore from ₹36.41 crore. In contrast, the ship-repair business revenue declined 37.4% YoY to ₹394.17 crore from ₹629.62 crore, with segment profit falling 51.5% to ₹135.02 crore from ₹278.24 crore.
The pressure was visible at the operating level, with EBITDA declining 20.4% to ₹193 crore from ₹242 crore in the year-ago period, while the EBITDA margin contracted sharply to 17.6% from 22.7% a year earlier. Total expenses increased during the quarter, with total expenses rising 9.79% YoY to ₹958.76 crore during the quarter. The cost of materials consumed stood at ₹453.26 crore (up 39.44% YoY), while employee benefits expenses stood at ₹127.07 crore (up 19.04% YoY) during the period under review. The margin compression indicates pressure on profitability despite the modest increase in revenue.
Cochin Shipyard shares gained 2.28% to ₹1,491 following the results announcement, with the stock positioned among the notable gainers on the Nifty Midcap 150 index as of 9:53 am Tuesday. Among the five analysts covering Cochin Shipyard, three have a 'Buy' rating, while one each has a 'Hold' and 'Sell' rating on the stock. The stock has declined around 8% year-to-date, with shares ending 3.88% lower at ₹1,436.95 on Monday. According to Kotak Securities, the brokerage maintained a 'Sell' rating with a price target of ₹860 per share, noting that the results were 10% ahead of expectations with better-than-expected execution offsetting in-line margin performance. The company's shares have remained volatile, largely trending lower since hitting a record high of ₹2,979 apiece in July 2024. The new ship block building project is expected to give a boost to the state's shipbuilding sector and attract further investment, with sources indicating that the proposed Block Fabrication Facility will help reduce construction time and accelerate vessel delivery.
