Cochin Shipyard LtdQ3 FY23Industrial Manufacturing

Cochin Shipyard Ltd

Q3 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 3

→Cochin Shipyard Limited expects to surpass its pre-COVID-19 turnover (FY '20 levels) in the current financial year, targeting revenues around INR 2,900 crores.
→Ship Repair revenue is projected to cross INR 900 crores this year, with a medium-term target of INR 1,200 crores within about three years.
→The new dry dock, LNG carrier-ready (310 meters), provides opportunities to enter or expand in the LNG carrier repair and shipbuilding segment.
→The order book, including naval projects like 8 ASW Corvettes and 6 NGMVs, has an executable horizon of approximately 7 years, ensuring steady revenue.
→Upcoming projects such as the Indigenous Aircraft Carrier (IAC) 2 and medium-term international contracts (e.g., CSOV vessels in Europe) are expected to fuel growth.
→The company foresees sustained better margins alongside revenue growth, driven by high-margin ship repair and naval orders.

Category 3

→Cochin Shipyard Limited expects to sustain better margins over the next financial year with PAT margins projected at 16%-17%.
→Full financial year revenue is expected to surpass pre-COVID (FY 2020) levels.
→The company anticipates crossing INR 900 crores in Ship Repair revenue this financial year, with a 3-year target of INR 1,200 crores, and a longer-term goal of INR 1,500 crores.
→There is a stable and large order book valued around INR 9,800 crores, including projects like the Next Generation Missile Vessels spanning roughly 7 years.
→Execution of significant naval projects and new facilities (e.g., ISRF and dry dock) will contribute positively.
→Order pipeline remains strong with around INR 1,400 crores RFPs in near term, including potential international opportunities.
→EBITDA margins have shown improvement, with 1H FY24 at 20%, indicating operating profitability growth.
→Free cash and ongoing capex funding provide financial flexibility for growth initiatives.

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→There is no specific mention of any current or upcoming fundraising through debt or equity in the provided transcript.
→Cash and capex details indicate healthy liquidity, with free cash of around INR1,000 crores available.
→Capex spending for the current year is about INR355 crores, funded partly from cash and partly from working capital.
→There is mention of ongoing capital expenditure projects (new dry dock, ISRF) funded internally without reference to new debt or equity issuance.
→The company focuses on operational and project execution rather than raising external funds at this time.
→No explicit discussion on plans for raising fresh equity or debt was made in the Q&A or management commentary sections.

Yes

→Current orderbook includes 8 ASW Corvettes and 6 Next Generation Missile Vessels (NGMV), totaling roughly 14 vessels with an executable timeline of about 7 years.
→Mid-term orders: 6 new-generation diesel-electric general cargo vessels for Europe (~INR 580 crores), to be completed by March 2026.
→Contracts include Mid-Life Upgrade and Re-Powering INS Beas (~INR 313.42 crores, 24 months duration).
→Orders for 8 Hybrid Electric Catamaran Passenger Vessels for IWAI (~INR 129 crores).
→Multiple Refit Contracts (MRC) with Naval Ship Repair Yards, Kochi and Karwar (INR 80 crores + INR 34 crores).
→Expected near-term RFP pipeline stands at ~INR 1,400 crores with additional possibilities in Europe.
→Large contract of INR 9,800 crores for NGMV provides stability.
→Awaiting finalization of 2nd Indigenous Aircraft Carrier (IAC 2) order, decision expected from Defence Acquisition Council (DAC) soon.

Yes

→Cochin Shipyard Limited is completing two major capex projects:
→ - New LNG carrier-ready dry dock (310 meters long), with expected commissioning by June 2024, costing around INR1,400-1,500 crores (revised from initial INR1,799 crores).
→ - International Ship Repair Facility (ISRF) with a total project cost of approximately INR970 crores, nearing completion by June 2024.
→Capex guidance for FY24 is around INR1,050 crores, partly funded from free cash (~INR1,000 crores) and advances.
→The new dry dock is dual-purpose: initially used for shipbuilding; also intended for ship repair to enhance high-margin business.
→Cochin Shipyard is actively exploring technological partnerships internationally, e.g., with M/s. IHC Holland for the dredger segment.
→Potential future shipbuilding opportunities include Indian Navy projects (IAC 2, missile vessels) and expanding repair services through a proposed Kochi ship repair cluster.
→The company is supporting maritime startups under the USHUS program with seed funding of INR1.7 crores.

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