Cochin Shipyard: Should you buy hold or sell this defence stock?

Antique Stock Broking maintained a ‘Hold’ rating on Cochin Shipyard Ltd and cut its target price to Rs 1,390 from Rs 1,471 after meeting the PSU’s management. The brokerage said the stock was trading at price-to-earnings multiples of 38 times and 32 times based on FY27 and FY28 earnings, respectively, which were at a premium to listed defence shipbuilding stocks, leading to the target price cut. The stock is down 31 per cent in the past six months.

The brokerage remained positive on the shipbuilding sector, which is witnessing a resurgence, driven by naval modernisation, demand for greener and autonomous vessels, and global trade recovery. 

"We have made minor earnings revision in view of higher share of commercial shipbuilding orders, which could entail lower margins than defence vessels," Antique said.

Cochin Shipyard recently secured an Rs 3,240 crore order from CMA, France, the world’s third largest shipping company. This has raised its order book to Rs 23000 crore, Antique said.

"CSL has emerged as the lowest bidder for Navy’s Next Generation Survey Vessel, with estimated order value of Rs 5,000 crore. These order wins have improved the order book growth and revenue outlook for the company," it said. Antique said the order is expected to be formally awarded by Q1FY27, post completion of contractual formalities and will be completed in 36 months. 

Including this order, the company’s order book can rise 21 per cent to Rs 28,000 crore. The domestic brokerage also expects Cochin Shipyard to company to be a major contender for the Landing Platform Dock (LPD) order with potential order value of Rs 20,000 crore.

Antique said 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. 

Beyond defence, it said India’s commercial shipbuilding segment also presents a sizeable opportunity, estimated at Rs 12,000–15,000 crore per year, with key growth areas including container vessels, coastal shipping, dredgers, ferries & cruises, and oil & gas carriers. 

"CSL’s tie-up with KSOE gives it an edge over others. We remain positive on the Naval Shipbuilding industry and recommend Hold on CSL," it said.