1 hr ago
Cochin Shipyard Shares Fall as Margin Outlook Tempers Defence Stock
Cochin Shipyard’s shares fell sharply after the company discussed lower future profit margins.
The company said its EBITDA margin may settle near 14%.
This is below the 17% margin reported in the June quarter.
Earlier high margins were helped by profitable nominated orders and interest income from surplus cash.
The company expects revenue to grow by about 12% in FY27.
It said growth could potentially reach 15%.
ICICI Direct Research changed its rating from “Buy” to “Hold.”
Antique also kept a “Hold” rating because the stock appears expensive compared with its expected execution and peers.
ICICI Direct Research downgraded Cochin Shipyard from “Buy” to “Hold” and set a ₹1,590 target.
Antique retained a “Hold” rating with a ₹1,671 target, citing valuation concerns.
Cochin Shipyard expects EBITDA margins to moderate toward 14% as unusually high-margin factors normalize.
The company expects FY27 revenue growth of around 12%, with potential acceleration to 15%.
ICICI Direct expects revenue to grow at a 12% CAGR during FY26-28, while EBITDA grows at 6%.
- Who
- Cochin Shipyard Limited, ICICI Direct Research, Antique, and investors.
- What
- Cochin Shipyard shares recorded their worst fall in two years after the company signaled moderating EBITDA margins, prompting cautious brokerage views.
- Where
- The development concerns Cochin Shipyard’s stock market trading and business operations.
- When
- The share decline occurred on Friday; the company provided its outlook during an investor call.
- Why
- Margins are expected to decline as high-margin nominated orders and income from surplus cash normalize, while brokerages also cited valuation concerns.
Cautious outlook
Growth potential
Margin direction
Cautious outlook
Brokerages expect margins to moderate because lower-margin contracts will represent a larger share and historically elevated benefits will normalize.
Growth potential
Cochin Shipyard expects margins to stabilize around 14%, suggesting profitability may settle at a sustainable level rather than collapse.
Stock valuation
Cautious outlook
Antique said the valuation prices in a more constructive execution outlook than the current quarterly run-rate and remains at a sharp premium to Mazagon Dock Shipbuilders.
Growth potential
ICICI Direct assigned a ₹1,590 target, indicating 14% upside from the reference price used in its report.
Business execution
Cautious outlook
ICICI Direct said substantial improvement in shipbuilding and ship-repair execution remains a key monitorable, reflecting uncertainty over the pace of delivery.
Growth potential
The company expects FY27 revenue growth of around 12%, potentially accelerating to 15%, supported by continued business activity.
Key facts
- ICICI Direct rating
- Downgraded Cochin Shipyard from “Buy” to “Hold”.
- ICICI Direct target
- ₹1,590 per share, implying 14% upside according to the article.
- Antique rating
- “Hold”.
- Antique target
- ₹1,671 per share.
- Expected EBITDA margin
- Around 14%, compared with 17% in the June quarter and 16% in FY26.
- FY27 revenue outlook
- Growth of around 12%, with potential acceleration to 15%.
- FY26-28 revenue outlook
- ICICI Direct expects a 12% revenue CAGR and 6% EBITDA CAGR.
Quotes
ICICI Direct Research
Brokerage research firm covering Cochin Shipyard
“Over FY26-28E, we expect CSL to deliver revenue CAGR of 12% on steady execution while EBITDA CAGR at 6% due to higher share of lower-margin contracts as guided by the management.”
businesstoday.in
Sources
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