Cochin Shipyard shares rise 3% despite analyst caution; should you sell?

Antique Stock Broking said it expects Cochin Shipyard's revenue growth to slow in the coming quarters due to a stagnant order book

Shares of Cochin Shipyard rose over 3 per cent on Wednesday after the company reported an 8 per cent rise in its June quarter net profit. 

 

The shipbuilding company's stock rose as much as 3.41 per cent during the day to ₹1,724 per share, the steepest intraday rise since August 11 this year. The stock pared gains to trade 0.5 per cent higher at ₹1,674 apiece, compared to a 0.34 per cent advance in Nifty 50 as of 10:42 AM. 

 

Shares of the firm rose for the third straight session and are down nearly 35 per cent since the June peak. The counter has risen 8.6 per cent this year, compared to a 4 per cent advance in the benchmark Nifty 50. Cochin Shipyard has a total market capitalisation of ₹43,934.49 crore.   

 

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Cochin Shipyard Q1 results 

The company reported a 7.9 per cent year-on-year (Y-o-Y) rise in net profit to ₹187.8 crore for the first quarter, compared with ₹174 crore a year earlier.

 

Revenue jumped 38.5 per cent to ₹1,068 crore from ₹771.5 crore in the same quarter last year. Ebitda rose 35.7 per cent to ₹241.3 crore from ₹177.8 crore, while the Ebitda margin slipped 50 basis points to 22.5 per cent from 23 per cent a year ago. 

Analysts on Cochin Shipyard Q1 earnings 

Kotak Securities said Cochin Shipyard's Q1 results were 40 per cent above expectations, aided by strong margins from the execution of a ₹1,200 crore one-off refit and dry-docking contract.

 

Ship-repair orders for INS Vikrant and INS Vikramaditya have supported performance in FY25 and Q1FY26, but these are one-time contracts, and the absence of new naval orders so far this year is a concern, the brokerage noted.

 

It added that any progress on tie-ups with HD KSOE (Hyundai), Maersk, or Drydocks World could act as key catalysts for the stock. The brokerage maintained its 'sell' rating, while raising its fair value to ₹860 from ₹850 earlier.

 

Antique Stock Broking said it expects the firm's revenue growth to slow in the coming quarters due to a stagnant order book. Ship-repair revenue in Q1 was boosted by a high-margin order for INS Vikramaditya, which has now been largely completed. As a result, ship-repair margins may trend lower in subsequent quarters.

 

The brokerage revised its earnings per share estimates for FY26 and FY27 down by 11 per cent and 16 per cent, respectively. Antique maintained its 'sell' rating on the stock, while lowering its target price to ₹1,664 from ₹1,700 earlier.