COCHINSHIP - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.6

📊 Core Financials:

- Quarterly PAT dropped to 101 Cr. from 188 Cr., showing significant earnings decline (-47.6%).

- EPS of 28.8 ₹ reflects moderate profitability.

- ROCE (20.4%) and ROE (15.8%) indicate healthy efficiency but not industry-leading.

- Debt-to-equity ratio of 0.18 shows low leverage, manageable for growth.

- Cash flows remain stable, supported by strong order book and government contracts.

💹 Valuation Indicators:

- Current P/E of 53.8 is well above industry average (40.8), suggesting overvaluation.

- P/B ratio ~ 7.1 (1,548 ₹ / 219 ₹), indicating stretched valuation relative to book value.

- PEG ratio of 4.19 highlights growth lagging valuation.

- Intrinsic value appears lower than current price, limiting margin of safety.

🚢 Business Model & Competitive Advantage:

Cochin Shipyard operates in shipbuilding, ship repair, and defense contracts. Its competitive advantage lies in government backing, strategic location, and strong order pipeline. However, profitability is cyclical and dependent on project execution and defense spending.

🎯 Entry Zone & Long-Term Guidance:

- Entry zone: 1,200–1,300 ₹ (near support levels and undervaluation zone).

- Long-term holding: Suitable for investors seeking exposure to defense and infrastructure growth. Accumulate cautiously on dips due to high valuations and earnings volatility.

Positive

• Strong ROCE (20.4%) and ROE (15.8%)
• Low debt-to-equity ratio (0.18)
• Government backing and strong order pipeline
• DII holdings increased (+0.15%)

Limitation

• High P/E (53.8) and P/B (~7.1) indicate overvaluation
• PEG ratio of 4.19 shows growth lagging valuation
• Quarterly PAT decline (-47.6%)
• Weak technical momentum (RSI 21.3, MACD negative)

Company Negative News

• Quarterly PAT fell sharply from 188 Cr. to 101 Cr.
• FII holdings decreased (-0.65%)

Company Positive News

• DII holdings increased (+0.15%)
• Strong 52-week performance (+26.9%)
• Government contracts provide long-term stability

Industry

• Industry P/E at 40.8 indicates sector is richly valued
• Growth driven by defense spending and infrastructure expansion
• Competition from domestic and global shipbuilders

Conclusion

⚖️ Cochin Shipyard shows strong fundamentals with healthy ROE/ROCE and government support. However, high valuations, weak technicals, and sharp profit decline raise caution. Best accumulated near 1,200–1,300 ₹ for long-term exposure to defense and infrastructure growth.