Cochin Shipyard Q1 FY27 earnings call

Where management's figures differ from the filing

• EBITDA margin: said EBITDA margin for the quarter was around 24%; filed 17.7% (excl other income). Management includes other income (interest income from cash surplus) in EBITDA per their practice; filed EBITDA excludes other income

What moved the numbers, as management explained it

• PAT fell to ₹151.45 cr (-19% YoY) despite revenue growing 2.4%, as higher-margin nominated aircraft carrier orders concluded and new business shifted to tender-based defense and commercial orders
• EBITDA margin guide reset to 14% blended; prior years' higher margins benefited from steady interest income on a ₹2,000-3,000 cr cash surplus now exhausted after ₹3,000 cr capex on ISRF and Drydock
• Operating cash flow was negative in FY26 because export orders use tail-end payment (30% during construction, 70% on delivery); cash inflow follows deliveries, not revenue recognition
• Q1 EBITDA margin of ~24% as reported by management includes other income (interest income); excluding other income, EBITDA margin is 17.7% per filed definition (accounting)

The numbers management led with

• Unexecuted order book: INR 22,000 crore
• L1 NGSV order value: approximately INR 5,000 crore (five next-generation survey vessels for Indian Navy)
• ISRF slump-sale valuation to JV: INR 1,800 crore (50% cash, 50% equity)
• Block Fabrication Facility capacity (planned solo): 60,000 TPA new facility plus 12,000 TPA existing = 72,000 TPA combined
• Defence pipeline size (potential): LPD ~INR 32,000 cr (4 nos); MCMV ~INR 36,000 cr (12 nos); P-17 Bravo ~INR 49,000 cr (7 nos)

Guidance on this call

Guided on earlier calls, and what was filed

Filed figures are summed from the company's own quarterly results for the whole period (EBITDA excludes other income); where one sits against what was guided is arithmetic, not a judgement.

By business

Balance sheet, capex and funding

• Operating cash flow was negative in FY26, expected to turn positive in FY27 as ~10 vessel deliveries trigger tail-end payments
• Cash surplus depleted from ₹2,000-3,000 cr after ₹3,000 cr capex on ISRF and Drydock; no loan taken
• ISRF JV slump sale valued at ₹1,800 cr; 50% cash and 50% equity to CSL; transaction targeted by FY27 end
• Tuticorin lease one-time payment ₹305.76 cr for 30-year lease of 110 acres land + 17.29 acres waterfront
• Total capex pipeline ~₹6,000-6,500 cr over next 5 years, funded 80:20 debt-equity; Shipbuilding Development Scheme offers 25% capex subsidy
• Maritime Development Fund's Interest Incentivisation Fund provides up to 3% interest subvention on loans

The industry, as management sees it

Government of India demand aggregation programme targets 432 vessels over 10 years for Indian commercial shipping, signalling a structural upswing in domestic shipbuilding. The Green Tug Transition Programme (GTTP) targets 50% green tugs by 2035-40 with ~INR 1,000 cr sector investment over 10 years. Defence procurement cycle remains active with major RFPs (LPD, MCMV, P-17 Bravo) in the pipeline totalling over INR 1 lakh crore potential order value. Marine-grade battery demand is currently entirely import-driven in India, creating an indigenisation opportunity.

Risks management named

• FY26 operating cash flow was negative due to export order milestone structure (30% during construction, 70% on delivery)
• Higher EBITDA margins of past three years supported by nominated aircraft carrier work unlikely to repeat
• Prior cash surplus of INR 2,000-3,000 cr that contributed to other income has been deployed into ISRF and drydock capex
• Defence contract finalisation timelines (NGSV, LPD, MCMV, P-17 Bravo) outside company control
• Hydrogen fuel cell vessel commercialisation depends on landside hydrogen/bunkering infrastructure still developing
• New capex ROC targeted at only 14-15% — modest versus historical returns
• Green tug transition to scale meaningfully only 3-4 years out due to cost premium of ~2x over diesel tugs

Not answered directly

• IAC-2 timing (no visibility, not at AoN stage)
• Defence RFP finalisation timelines (Navy procedural, outside CSL control)
• Exact revenue start date for Vadinar (depends on environmental clearance)
• Business plan finalisation for Green Maritime JV (under development)

Asked for a number, answered without one

• Green Maritime JV detailed margin: Management said EBITDA margin around 20% ballpark; clarified business plan is yet to be finalized with significant R&D involved
• Defense order pipeline timing: NGSV inked around November 2026; for LPD, MCMV, P-17 Bravo RFPs, Navy controls timeline and CSL cannot say anything
• Hydrogen fuel cell commercialization: Technology demonstrator only; hydrogen fuel cell worldwide is at initiation stage; converting to business will take time but CSL has front-runner advantage
• IAC-2 order visibility: Management confirmed no visibility; has not reached the AoN (Approval of Necessity) stage yet per their information

Every question, with its answer

1. 1. Green Maritime JV scale and economics

   Garvit Goyal, Serene Alpha14:21

   Question. Question on Green Maritime Propulsion JV — what product basket will it cater to, what scale over 3 years, and when can meaningful contribution be expected?

   Answer, Harikrishnan S, Director (Operations). The company was incorporated in June '26. Targeting energy storage systems for marine sector and electrical power management systems. Revenue target is INR 640 crores by 5th year. Expected EBITDA margin ~20%. JV is 60% HBL and 40% CSL; total capital commitment only INR 50 crores as manufacturing will be via HBL's existing facilities and CSL will do marketing and R&D. JV revenue will consolidate only at HBL's level since they hold 60%. Battery system is the JV's turnover; tug orders are taken by CSL separately.

   Follow-up. What is the addressable market size for electrical tugs in next 3 years, and how many competitors are bidding?

   Answer. Rajesh Gopalakrishnan noted electric propulsion on tugs is still evolving — GTTP just declared; electric tugs cost ~2x conventional. Government wants 50% green tugs by 2035-40. Total sector investment ~INR 1,000 cr in next 10 years, with major pie for batteries. CSL already building four green tugs with battery systems being routed through the JV.

2. 2. Drydocks World JV operating model

   Dipen Vakil, PhillipCapital30:16

   Question. On the DDW JV — will the JV cater only to DP World vessels or also domestic demand? And will there be any market-share loss for CSL in overlapping opportunities?

   Answer, Rajesh Gopalakrishnan, Director (Technical). DDW brings global scale, efficiencies and global market connects. CSL has a significant captive Indian market for vessels up to 130m long and 6,000 tons which ISRF handles. Defence and government vessels in this size will continue to be routed through CSL, executed by the JV. CSL and DDW have a clear understanding that DDW will not ingress into the larger vessel market that CSL handles. The JV is expected to bring global vessels to India as an add-on.

   Follow-up. What is the order pipeline over next 1-2 years on defence and commercial sides giving visibility on order inflows?

   Answer. Jose V J listed major defence pipeline: LPD (4 nos, ~INR 32,000 cr), MCMV (12 nos, ~INR 36,000 cr), P-17 Bravo (7 nos, ~INR 49,000 cr). On commercial side, government demand aggregation has 432 vessels over 10 years; SCI and BCSL have already floated tenders and CSL is participating. Active commercial negotiations include a repeat 12,000 m3 dredger for DCI and four 500-passenger vessels for Andaman on nomination basis. Also participated in SCI tenders for MR tankers.

3. 3. Block Fabrication Facility capacity

   Dipen Vakil, PhillipCapital33:33

   Question. Block fabrication facility going solo at smaller size — what is current block fabrication capacity and what will be capacity once new facility is added?

   Answer, Jose V J, Chairman and Managing Director and Director Finance. Current CSL block fabrication capacity is ~12,000 TPA. With the new drydock, need more steel throughput. With Hyundai, was planning 1 lakh TPA. Going alone, now planning ~60,000 TPA from new facility. Combined throughput ~72,000 TPA (60,000 new + 12,000 existing).

4. 4. Cash flow normalisation and ROC

   Mohit Chaurasiya, Individual Investor34:31

   Question. Despite strong FY26 PAT, operating cash flow was negative due to inventory and receivables build-up. Now entering new investment cycle — what normalised cash conversion should we expect? And what ROC threshold on new ship repair investments?

   Answer, Jose V J, Chairman and Managing Director and Director Finance. Negative operating cash flow is because export orders (European customers) have tail-ended cash flow — 10% on signing, 10% on keel laying, 10% on launching, 70% on delivery. Vessels taken in '23 and '24 are scheduled for delivery in current and next FY, already 80-90% construction complete but only 30% money received. Targeting 10 vessel deliveries in FY27, already delivered three. Once deliveries happen, the back-end payment will be received and cash flow will turn positive. ROC on new investments targeted at 14-15%.

   Follow-up. Can we expect operating cash flow to turn positive in FY27?

   Answer. Jose V J confirmed: "FY27, the cash flow will be positive."

5. 5. Green Maritime CSL role and hydrogen demonstrator

   Garvit Goyal, Serene Alpha36:30

   Question. Follow-up on Green Maritime — what is CSL's role versus HBL across the product basket? And on the hydrogen fuel cell vessel (KPIT partnership), what scale and commercial arrangement?

   Answer, Rajesh Gopalakrishnan, Director (Technical). HBL has energy storage manufacturing expertise but no marine sector presence; CSL brings shipbuilding and marine expertise to marinize HBL systems. CSL's role is helping HBL marinize the systems — currently all marine batteries are imported. On the KPIT hydrogen fuel cell demonstrator (India's first indigenous hydrogen fuel cell vessel operational in Varanasi), it was a technology demonstrator/pilot project. Hydrogen ecosystem — bunkering, landside infrastructure — will take time to develop; CSL wanted front-runner advantage. Commercial revenue conversion will take time but CSL will be ready when the market arrives. FY27 revenue from JV will not be material.

   Follow-up. Will there be any JV revenue contribution in FY27?

   Answer. Jose V J: "FY27, not much turnover. But it will not come to our top line." Garvit asked about bottom line — Jose confirmed yes, but negligible. (Confirming the JV revenue consolidates only at HBL's level since CSL holds 40%.)

6. 6. Revenue and margin guidance

   Bhavya Gandhi, Bajaj Alternate37:32

   Question. On INR 22,000 cr order book — how much revenue booking can be expected over next two years? And what EBITDA margin over next two years?

   Answer, Jose V J, Chairman and Managing Director and Director Finance. Last year consolidated turnover was INR 5,022 cr. Normally guides around 12% growth, but actuals may end up 12-15%. Conservatively guiding 12% YoY. EBITDA margin around 14% blended on conservative basis. NGSV order expected to be inked around November 2026. DCI repeat dredger (~INR 1,300 cr) likely to conclude within two months.

7. 7. Margin trajectory explanation

   Abhishek Poddar, Citadel40:17

   Question. Margins over last 3 years were higher than 14%. How should one think about margins going forward? Is the 14% this year because of lower ship repair margins, and what about next 2 years?

   Answer, Jose V J, Chairman and Managing Director and Director Finance. Higher margins historically were due to nominated orders — indigenous aircraft carrier build and two aircraft carrier refits which had higher margins. Going forward, defence tenders are also on tender basis. Also, previous EBITDA included interest income from INR 2,000-3,000 cr cash surplus which has been deployed into ISRF and drydock capex (~INR 3,000 cr spent without any loan). Shipbuilding margin 10-12%, ship repair 20-22%; 70:30 mix gives blended 14-15% conservatively. Confirmed EBITDA margin includes interest income as a normal element over 10 years. Q1 reported ~17% is higher because mix will average out to 14% for the full year.

   Follow-up. On the inquiry pipeline — LPD, MCMV, P-17 Bravo — what is expected to get ordered in FY27/FY28?

   Answer. Navy yet to come out with RFP for LPD. P-17 Bravo RFP already issued; 3-4 months to submit bid, then CCS approval and PNC procedures take time. Timelines not in CSL's control. CSL is qualified (Category A shipyard) and bidding aggressively. P-17 Bravo was previously built by other shipyards (Garden Reach) but CSL is qualified to bid — financial L1/L2 will determine award.

8. 8. FY27 vessel delivery schedule

   Dipen Vakil, PhillipCapital44:46

   Question. On the 10 vessels planned for delivery in FY27 — schedule by vessel type and NGMV status?

   Answer, Harikrishnan S, Director (Operations). Among three ASW submarines planned this year, one delivered; balance two by December 2026. Multipurpose vessel: one delivered (German client), two more planned this year. Trailing suction hopper dredger for DCI to deliver next month — trials end of this month. Two commissioning service vessels for Cyprus client: one by October '26, other by end Feb/early March '27. Two zero-emission container vessels for Samskip (Netherlands): one by end February.

9. 9. On marinized batteries from the JV — what differentiation will the JV bring versus impor…

   Garvit Goyal, Serene Alpha46:44

   Question. On marinized batteries from the JV — what differentiation will the JV bring versus imported batteries? Is it cost or quality?

   Answer, Harikrishnan S, Director (Operations). Marine batteries face more strenuous conditions — salt, vibration etc. HBL has expertise in electric mobility batteries; CSL provides marine expertise to marinize. Differentiation advantages: (1) cost reduction from local production — lower transport cost and import duties; (2) supply chain resilience especially in crisis; (3) faster delivery; (4) supports sustainability and electric mobility transition. Major global shipyards are entering strategic alliances with battery manufacturers for supply chain resilience — CSL-HBL is similar.

10. 10. Capex revenue potential across projects

    Deepak Krishnan, Kotak Institutional Equities49:22

    Question. On the various capex plans — ISRF INR 1,800 cr revenue potential at 3 and 5 years; Vadinar revenue potential; combined capex ~INR 6,000-6,500 cr over next 5 years — what is the broad revenue target?

    Answer, Jose V J, Chairman and Managing Director and Director Finance. ISRF: expecting INR 600 cr turnover over next 2 years, scaling to INR 1,000-1,200 cr over 5 years. Vadinar: revenue starts 36 months post environmental clearance; INR 300-600 cr starting turnover. Tuticorin: in DPR stage; INR 650-700 cr start scaling to INR 1,800-2,000 cr over 7-8 years. Capex spread over 5 years funded 80:20 debt-equity. Also tapping 25% capex subsidy under Government of India Shipbuilding Development Scheme and 3% interest subvention under MDF Interest Incentivisation Fund.

    Follow-up. IAC-2 visibility at this point?

    Answer. Jose V J: "I would say there is no visibility, because as of now, it has not reached the AoN stage." Navy procedure is Approval of Necessity; no authentic info available. If Navy decides, it will come to CSL.

11. 11. Defence pipeline win probability and commercial shipping

    Deepak Krishnan, Kotak Institutional Equities52:09

    Question. On naval programs — which has higher probability for CSL? And on domestic commercial shipping (SCI, BCSL), what is realistic order inflow potential over 2-3 years?

    Answer, Jose V J, Chairman and Managing Director and Director Finance. On naval pipeline, P-17 Bravo is more competitive because other yards have done the vessels. LPD and MCMV are more suitable for CSL — already did aircraft carrier, have large dock and steel-heavy platform experience. CSL will participate aggressively in all tenders. On commercial shipping: MR tankers technical bid submitted, indicative cost ~INR 1,700 cr; Aframax tanker responded to EOI with indicative cost ~INR 2,600 cr. Execution cycle 36 months for first vessel, 6-8 months for subsequent vessels. EBITDA margin split reaffirmed: shipbuilding 10-12%, ship repair 22-24%, blended 14-15% conservatively; shipbuilding is 70% of turnover, ship repair 30%. Other income now minimal as prior cash surplus deployed.

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In their words