Cochin Shipyard Ltd. reported disappointing March quarter results that fell short of analyst expectations across key metrics. According to reports from CNBC TV18, revenue declined 26% year-on-year, significantly weaker than estimates that had projected a 6% decline. EBITDA fell 13% against expectations of a 12% increase, while net profit declined 24% compared to estimates of a 16% drop. The company's total production cost as a percentage of sales increased to 69% from 60% a year ago, indicating rising operational expenses.
Within business segments, the shipbuilding business reported better profitability during the quarter, with margins improving to 19% from 16% a year ago, while revenue increased 8% year-on-year. However, the ship repair segment remained weak, with revenue declining 60% and margins falling sharply to 10% from 40% a year ago, broadly in line with management guidance. For the full year FY26, shipbuilding margins improved to 18% from 16%, while ship repair margins declined to 26% from 39% last year.
For the full year FY26, performance remained weak across key parameters with revenue declining 5% against the company's guidance of 14% to 15% growth. EBITDA and net profit fell 23% and 24% respectively, while full-year EBITDA margins contracted 360 basis points to 15% from 19% in FY25. Production costs as a percentage of sales increased to 65% from 61%, mainly due to higher subcontracting expenses. Provisions for the year stood at ₹36 crore compared to ₹126 crore in the previous year.
Kotak Institutional Equities has a 'Sell' rating on Cochin Shipyard with a price target of ₹830 per share. The brokerage attributed the weak performance to weak execution in the shipbuilding business and lower margins, primarily because of normalisation in ship-repair margins after completion of one-time repair orders related to INS Vikrant and INS Vikramaditya. Of the four analysts covering the stock, two have 'Buy' ratings, while one each recommends 'Hold' and 'Sell'. Shares ended 3.03% lower on Friday at ₹1,595.30 and are down 2% so far this year.
