Corporate Review     

Published: February 28, 2025
Updated: February 28, 2025

Cochin Shipyard Ltd

Leading India’s shipbuilding vision

Cochin Shipyard (CSL), a category-1 ‘miniratna’ Central PSU which is listed on both NSE and BSE, recently entered into a memorandum of understanding (MoU) with AP Moller-Maersk to explore collaboration opportunities in ship repairs, maintenance and shipbuilding in India. Re cently, the Union Budget 2025-26 announced the government’s plan to position India among the top global maritime hubs. The budget announcement also aligns with the government’s ‘Vision 2047’ maritime objectives.

It is worth mentioning that CSL already has established tie-ups with select specialist firms from the near east, far east, and south east Asia, Europe and the US for technology transfer and material packages for shipbuilding, ship repair platforms, rigs and upgradation of yard facilities.

The new tie-up with AP Moller-Maersk could prove highly meaningful and mutually beneficial going forward, because Maersk is an integrated logistics company and glo bal leader in the domain, operating in 130 countries with 1,10,000 people. Moreover, Maersk is aiming to reach net zero emissions by 2040 across its entire business with new technologies, new vessels and green fuels. However, it will be equally important to see how CSL uses this tie-up to accelerate its pace of incremental growth.

The MoU with Maersk covers sharing of technical ex pertise for achieving global standards in ship maintenance, exploration of ship repair, dry docking and new building opportunities, joint training programmes, and skill devel opment initiatives for both CSL employees and Maersk sea farers. From one more angle, this tie-up could benefit CSL immensely as it is now focusing on making green ships, including hydrogen fuel cell ships, methanol ships, electric ships and hybrid ships. In addition, it is working on a fuel cell vessel and an electric catamaran ferry.

HI-TECH YARD

CSL’s existing yard facility, spread over 170 acres in Kochi, Kerala is a modern and well-managed shipyard and is important from multiple perspectives. In the last one de cade in particular, the yard has reduced the average time of construction of large ships through augmentation of facili ties, upgradation of the ship design department, and adop tion of an integrated hull outfitting and painting system (IHOP) system of construction.

On a consolidated basis, the company has fared well by achieving revenues of Rs 3,294 crore during the first nine months of FY25 against Rs 2,774 crore in the same period of the previous year. PBT and PAT were at Rs 741 crore and Rs 540 crore respectively vis-à-vis Rs 729 crore and Rs. 525 crore in FY24. The EPS for the period has been Rs 20.23 (PY: Rs 19.94) on a Rs 5 face value share and equity capital of Rs 131.54 crore, wherein the govern ment of India owns 67.91%. CSL is almost debt-free and has a cash sur plus. Two interim dividends of Rs 4 and Rs 3.50 were declared for the current fiscal year.

The capital work-in-progress (CWIP) got reduced from Rs 2,195 crore in March 2024 to Rs 1,719 crore in September 2024 as the company has provisionally capital ised the ISRF project cost from CWIP for an amount of Rs 767.32 crore due to the commercialisation of the project for limited review purposes.

At the end of nine months, the debt-equity ratio stands at 0.01, OPM 25 per cent, NPM 18 per cent, current ratio 1.34, and paid up debt capital Rs 23 crore sup ported with an ‘AAA’ credit rating. The company has two wholly owned subsidiaries, viz., Hooghly Cochin Shipyard Ltd (Hooghly CSL) and Udupi Cochin Shipyard Ltd (Udupi-CSL).

ADANI ORDER

In the recent past, Adani Ports & SEZ, through its subsidiary Ocean Sparkle Ltd, has placed an order for 8 units of 70T bollard pull ASD (azimuthing stern drive) tugs on Udupi-CSL. The value has not been disclosed but the company has classified this particu lar order in its Rs 250-500 crore category. Interestingly, this order is in addition to the three 70T bollard pull tugs already under construction for the same client, totalling 11 tugs.

Udupi-CSL, since being taken over by CSL in 2020, was revived and turned around in a short period and now its order book has crossed Rs 2,000 crore. Expressing his sense of satisfaction, Madhu Nair, Chairman & MD, CSL, said “CSL and Udupi-CSL have introduced the Robert Allan tugs in India, complying with the approved standard tug design and specifications (ASTDS), and have benchmarked the delivery timelines and quality of tugs be ing constructed in India. CSL is committed to transforming the in dustry by introducing battery elec tric tugs too through the upcom ing green tug transition programme (GTTP) announced by the government of India.”

It appears that Udupi-CSL, which has two facilities at Malpe and Hangarkatte and Babuthotta in Karnataka, will contribute sizeably to CSL’s overall growth. As per the data available publicly, the company had a consolidated order book of Rs 22,587 crore as of June 30, 2024, comprising Rs 21,587 crore of shipbuilding and Rs 1,000 crore towards ship repair. The shipbuild ing orders of 65 ships include 14 naval ships and 22 coastal ships for its European clients.

The Ministry of Defence (MoD) has floated several requests for proposals (RFPs) for shipbuild ing projects. Likewise, the Indian Navy and Indian Coast Guard also have ambitious acquisition plans and the overall scenario for war ship building looks to be boom ing in the coming years. These all augur well for CSL. It’s worth men tioning that CSL is the only ship yard in India which can build upto 1,10,000 DWT, carry repairs upto 1,25,000 DWT, and importantly can repair an Air Defence Ship as well.

BRIGHT FUTURE

At the current market price of Rs 1299, CSL is valued at Rs 34,178 crore, which went up to Rs 78,383 crore at its peak (all-time high) market price of Rs 2,979 per share on July 8, 2024. The yearly high-low prices are Rs 2,979 and Rs 712 respectively. Investors with patience can enrich their portfolio by accumulating the stock in small quantities from its current level, as the company has a bright growth poten tial and the sector has entry barriers.