Cochin Shipyard Shares May Drop Nearly 60% Amid Order Concerns, Warns Analyst

Cochin Shipyard Shares May Drop Nearly 60% Amid Order Concerns, Warns Analyst

Despite a sharp rally in recent sessions, Cochin Shipyard Ltd. may be heading for a significant correction. Brokerage firm Kotak Institutional Equities has projected a potential 60% downside from current levels, citing the lack of major upcoming orders and reliance on one-time ship repair contracts.

Stock Rally May Be Misleading

Cochin Shipyard shares have been on a tear lately, rising 35% over the past six trading sessions and trading 8% higher on Friday at ₹1,953.80. The stock has gained 25% year-to-date in 2025, although it still remains 35% below its all-time high of ₹2,979.

However, Kotak believes this rally may be short-lived. In its latest note released on May 16, the brokerage pointed to a lack of future defence order visibility as a major concern.

One-Time Contracts Not Enough to Sustain Growth

Much of the recent performance has been driven by ship repair work on Indian Navy vessels such as INS Vikrant and INS Vikramaditya. While impactful, these are non-recurring contracts, and Kotak warns that relying on such orders poses a risk to long-term revenue consistency.

Furthermore, the brokerage noted that no significant defence orders have been won by the company in the past two years, with most new deals coming from small commercial and repair projects.

Indian Navy’s Strategic Shift Adds Pressure

Adding to the uncertainty, Kotak cited recent media reports suggesting that the Indian Navy is deprioritizing its earlier plan to operate three aircraft carriers simultaneously. Instead, focus is shifting toward developing a second indigenous aircraft carrier, which may not translate into immediate contracts for Cochin Shipyard.

Financial Forecast Revised Down

Cochin Shipyard’s Q4 results were broadly in line with expectations, but weaker-than-anticipated margins due to higher provisions remain a concern. This was partially offset by higher other income.

Kotak has reduced its FY26 and FY27 earnings estimates by 3% and 6%, respectively, to reflect the expected slowdown in shipbuilding revenue.

Interestingly, while the brokerage raised its target price from ₹830 to ₹850, this still indicates a potential 60% fall from the current trading level.

Analyst Sentiment: Mixed Outlook

Out of the five analysts covering Cochin Shipyard:

• 3 have a “Buy” rating

• 1 has a “Hold” rating

• 1 has a “Sell” rating

Although optimism remains among some analysts due to the company’s long-term strategic importance and potential global partnerships — including possible tie-ups with Korean shipbuilders, Maersk, or Drydocks World — the near-term outlook is clouded by uncertainty.

Final Word: Caution Advised

Investors riding the recent rally may want to temper expectations, as Cochin Shipyard faces challenges from its limited defence order book and strategic shifts within the Navy. While the company remains a key player in India's shipbuilding landscape, sustainable growth will likely depend on securing long-term, large-scale contracts.

Keep an eye on developments in both domestic defence procurement and potential international partnerships — they may hold the key to the stock’s next major move.