The defence stocks are in focus. The Nifty Defence Index is up nearly 3% in intra-day trade. Several defence counters are up smartly in trade today. The defence shipbuilder stocks are also seeing sharp gains. Cochin Shipyard is up 4% today.ย
Antique Stock Broking has revised its rating on Cochin Shipyard from Sell to Hold, keeping the target price unchanged at Rs 1,471 per share.
For the better part of the last year, Antique Stock Broking had been bearish on Cochin Shipyard, citing a stagnant order book and no real triggers in sight. That view is now changing, though not dramatically. The brokerage has moved the stock from Sell to Hold after a string of fresh orders landed at the shipyard’s doorstep. Based on the current market price, the target price implies aboutย 5% upside-for the stock price.
Here is what has changed the stance of the brokerage:
A landmark deal that changes the narrative
The single biggest development that prompted Antique to reconsider its stance is Cochin Shipyard bagging an order from CMA CGM, France, which is the world’s third-largest shipping company. The deal involves building six liquefied natural gas-powered containerships, each with a capacity of 1,700 twenty-foot equivalent units. The vessels are to be delivered between 2029 and 2031.
The order is valued at approximately $360 million, or roughly Rs 3,240 crore, based on media reports. More importantly, this is among the first LNG-powered containership orders to be executed at an Indian yard, marking a technological step-up for the domestic shipbuilding sector. Antique notes that Cochin Shipyard will execute this in technical partnership with Korean shipbuilder HD Hyundai Heavy Industries, one of the largest in the world.
Antique’s report quotes the significance directly: “This is a major step for the company to establish its foothold in the LNG-driven container vessel market.”
The defence pipeline is opening up
Cochin Shipyard has also emerged as the lowest bidder, or L1, in the Indian Navy’s tender for five Next Generation Survey Vessels. The estimated value of this order is around Rs 5,000 crore. While the formal award is pending completion of procedural formalities, Antique says its inclusion would push the total order book up by 21% to Rs 28,000 crore.
The brokerage also sees Cochin Shipyard as a serious contender for the Landing Platform Dock order, which could be worth as much as Rs 17,000 crore.
Antique writes that “the Indian defence shipbuilding industry is poised for a significant order inflow, backed by the Indian Navy and Indian Coast Guard’s ambitious fleet expansion plans, each targeting a fleet size of around 200 ships.”
The order book has crossed Rs 23,000 crore
With the CMA CGM deal already in the bag, Cochin Shipyard’s order book now stands at Rs 23,000 crore. Antique puts the total potential order pipeline from known opportunities at Rs 94,000 crore. To put that in perspective, the company’s revenue for the current financial year is estimated at around Rs 5,259 crore, which means the potential order pipeline is roughly 18 times its annual revenue.
When compared against peers, Mazagon Dock Shipbuilders sits on a current order book of Rs 27,000 crore with a Rs 2,06,000 crore potential pipeline, while Garden Reach Shipbuilders has Rs 18,000 crore in hand with a Rs 70,000 crore pipeline.
Commercial shipbuilding is also picking up
Beyond defence, there are signs that the commercial shipbuilding space is stirring. Shipping Corporation of India has floated an expression of interest, on behalf of a proposed joint venture with three oil companies, to build eight Very Large Gas Carriers of 88,000 cubic metre capacity. The estimated value is around USD 950 million, or roughly Rs 8,740 crore. The structure requires two of these vessels to be built at an international shipyard, with the remaining six to be built at an Indian yard through a technical tie-up with that global partner.
Cochin Shipyard’s existing tie-up with HD Hyundai Heavy Industries puts it in a strong position to meet the technical qualification criteria here.
The Shipping Corporation of India joint venture has also floated a tender for four medium-range product tankers that could cost over USD 200 million, or around Rs 1,840 crore.
Antique notes that India’s commercial shipbuilding opportunity is estimated at Rs 12,000 to 15,000 crore per year, covering container vessels, coastal shipping, dredgers, ferries, and oil and gas carriers.
Earnings are expected to recover sharply in FY27
The near-term numbers are not particularly exciting. Antique estimates Cochin Shipyard’s profit after tax for the current financial year at Rs 572 crore, which is actually a 31% decline from last year. The brokerage attributes this to revenue recognition patterns and cost pressures.
However, the recovery expected in FY27 is meaningful, with profit after tax projected to jump to Rs 912 crore, representing a 59% increase year-on-year.
Earnings per share is estimated at Rs 21.7 for the current financial year, rising to Rs 34.6 in FY27 and further to Rs 41.3 in FY28. The stock currently trades at 40 times the FY27 estimated earnings, which remains on the expensive side when compared with defence peers like Mazagon Dock and Garden Reach.
The new dry dock is a game-changer for capacity
One reason to stay interested in the long-term story is the new large dry dock Cochin Shipyard has built, which stretches 310 metres and is capable of constructing Suezmax and Capesize vessels. This significantly expands what the company can take on in terms of vessel size and complexity.
The shipyard also has an International Ship Repair Facility that can handle vessels up to 130 metres in length.
These are not just infrastructure additions. They are capacity enablers that allow Cochin Shipyard to bid for contracts it was previously not equipped to handle.
The bottom line
Antique’s revised stance on Cochin Shipyard can be termed as cautious optimism. Valuations remain stretched at over 40 times FY27 earnings. The stock has corrected about 7% over the past month and roughly 15% over the past three months, which has brought it off its highs.
What has clearly changed is the order flow visibility. After months of drought, Cochin Shipyard has two significant wins on the board and a defence pipeline that could add substantially more. The tie-up with HD Hyundai Heavy Industries also gives it a technical edge in next-generation vessel categories.
Antique concludes that it “remains positive on the Naval Shipbuilding industry and recommends Hold on Cochin Shipyard,” acknowledging that the risk-reward is better than it was, even if the stock is not yet a compelling buy at current prices.