Cochin Shipyard Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Cochin Shipyard Limited (COCHINSHIP) Q2 FY24 Earnings Concall

• Defense Projects
  • Completed guarantee refit of aircraft carrier INS Vikrant, contributing INR85 crores revenue in Q2.
  • On track for simultaneous launch of 3 ASWC corvettes on Nov 30; will lay keel for 2 more in Dec.
  • These projects drove revenue growth in the period.
• New Contracts
  • Subsidiary won order from European client for 6 general cargo vessels worth INR580 crores.
  • Signed contract with Defence Ministry for INS Beas midlife upgrade for INR313 crores over 24 months.
  • Received order from IWAI for 8 hybrid electric catamaran passenger vessels worth INR129 crores.
  • Won multiple Indian Navy ship repair contracts worth INR114 crores.
• Financial Performance
  • Consolidated turnover increased 32% YoY to INR1,488 crores.
  • PBT jumped 76% to INR389 crores.
  • Profit after tax grew 81% to INR280 crores.
  • 20% EBITDA margin, excluding other income.
• Outlook
  • Well positioned with strong order book and focus on efficiency.
  • Launch of 3 ASWC corvettes this month major milestone.
  • Building capacity across yards for future growth.
  • Confident in sustaining momentum from first half into second half.
  • Expect to cross pre-COVID turnover of FY2020.
  • Foresee EBITDA margin of 16-17% for full financial year, driven by higher share of ship repair and IAC work which have better margins.
  • Capex plan of INR355 crores for current year, spent INR125 crores so far.
• Expansion Projects
  • International Ship Repair Facility (ISRF) has achieved 81% progress.
  • To complete ship lift system and first 2 workstations by Dec 2023.
  • New dry dock project has achieved 83% progress.
  • To inaugurate dry dock by Dec 2023 after civil works and full commissioning by mid-2024.
• Order Pipeline
  • Lost out on some orders like Ocean Research Vessel and Fast Patrol Vessel.
  • However, order pipeline remains strong at Rs 1,400 crores of near-term RFPs.
  • Also looking at opportunities in Europe – offshore vessels and short sea vessels.
  • Potential deals in 500-1,000 crores range in these segments.
• Green Vessels
  • has strong interest in green vessel transition program.
  • Traction expected at subsidiary units in Kolkata and Udupi.
  • Will compete with other yards but see significant potential.
  • Focus on more advanced technologically vessels.
• Shipbuilding Orderbook and Financials
  • Has a strong orderbook of around INR20,000+ crores for naval projects like ASW corvettes and Next Generation Missile Vessels (NGMVs).
  • Naval orders provide revenue visibility for next 5-7 years.
  • Margins in line with normal shipbuilding business.
  • Total naval orderbook value is around INR9,800 crores.
  • For FY24, guidance is to spend INR350 crores on shipbuilding infrastructure projects.
• Ship Repair Business Expansion
  • Aiming to grow ship repair revenue to INR1,200 crores in next 2-3 years from current levels of INR700-900 crores.
  • Looking to develop Kochi as a formal ship repair cluster through partnerships and more ancillary units.
  • New dry dock facility is LNG carrier ready. Evaluating LNG vessel repair opportunities.
• Partnership and Order Opportunities
  • In discussions with government and private entities for new order for vessel made for Andaman and Nicobar.
  • Seeing good opportunities in international market for dredgers based on this experience.
  • Looking for international partner for operations of new ship repair facilities.