Cochin Shipyard: down 55%, still priced at 51 times

Cochin Shipyard Limited (NSE: COCHINSHIP) trades near ₹1,335, about 55% below its July 2024 peak of ₹2,979. Q1 FY27 profit fell 19.4% to ₹151.5 crore. What happened Revenue rose 2.4% to ₹1,094 crore, while expenses grew 9.8%. EBITDA fell 20% to ₹193 crore, and margin shrank to 17.7% from 22.6%. Shipbuilding revenue jumped 59% to ₹700 crore, but ship repair fell sharply. The order book stands at about ₹22,000 crore. The company is also the lowest bidder for five Navy survey vessels worth about ₹5,000 crore, which would take it to ₹27,000 crore. Why it matters Ship repair is quick, high margin work. Building warships is slow, lower margin work spread over years. As the mix tilts to building, margins fall even when orders pour in. My view Orders are not the problem. At over four years of revenue, visibility is strong. Profit quality is the problem. Look at other income. It was ₹67 crore this quarter, about 44% of net profit. That is mostly interest on cash. Now the company plans ₹6,500 crore of capex for new capacity. As that cash is spent, this cushion shrinks. So the stock is down 55%, but not cheap. At about 51 times trailing earnings with return on equity near 11%, you are still paying a growth price for a business whose margins are going the wrong way. The turn comes when shipbuilding margins improve as the corvette and missile vessel orders mature. That is a FY28 story, not a next quarter one. What I am watching Formal award of the ₹5,000 crore survey vessel order, ship repair recovery, and Q2 FY27 margins. On the chart, ₹1,187 is the 52-week low and key support. My stance: Wait. Accumulate only near ₹1,200, and only if margins stop falling. Disclosure: I do not hold a position in Cochin Shipyard Limited at the time of writing. This is not investment advice.