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  • 22 May 2023
  • ICICIdirect Research

COCHIN SHIPYARD REPORTS PPERATIONAL PERFORMANCE MUCH BELOW OUR EXPECTATIONS

COCHINSHIP - 1915 Change: 11.20 (0.59 %)

News: Revenue came in at Rs 600.1 crore (down 50.5% YoY); much lower than expectations. Both the segments, ship-building and ship-repair, have witnessed worse than expected execution and reported revenue decline of 52.7% YoY & 42.1% YoY respectively. Sequentially too, total revenue is down by 6.5%. Gross margin stood at 13.2%; contracted significantly from 37% in Q4FY23 and 47% in Q3FY23. At EBITDA level, company has reported loss of Rs 67.1 crore as against positive EBITDA of Rs 296.3 core in Q4FY22 and Rs 148.8 crore in Q3FY23. We had estimated EBITDA of Rs 314.5 crore. Reported PAT came in at Rs 39.3 crore, however there was an exceptional item of Rs 61.8 crore (related to prior periods capex). Adjusted PAT loss stood at Rs -22.5 crore as against profit of Rs 274.6 crore in Q4FY22 and Rs 110.4 crore in Q3FY23.

View: Overall operational performance during the quarter came much below our expectations. Full year revenue is down by 25.9% YoY as against the management’s guidance of flattish growth. Execution during the quarter has been poor which led to loss at EBITDA level and we would wait for more clarity on the same. The company’s order backlog stands strong which is estimated to be at ~Rs 20500 crore (8.4x FY23 revenues) including the recent concluded contract like six next generation missile vessels (NGMVs) worth Rs 9805 crore, eight anti-submarine warfare Corvettes contract for Indian Navy, export orders from Europe and ship-repair contracts. Moreover, opportunity size is also big considering the company’s exposure is diversified across military warships, cargo vessels and ship-repair. However, execution remains a key factor.

Impact: Negative