However, while Mazagon Dock outperformed its peers on the earnings front, Garden Reach showcased strong growth and execution momentum, while Cochin Shipyard had the weakest operational performance among the three.
Let us take a look at how these three companies fared during the quarter across parameters:
| Metric | Mazagon Dock | Garden Reach | Cochin Shipyard |
| Revenue (%, YoY) | 12 | 39 | -7 |
| EBITDA (%, YoY) | 48 | 33 | -32 |
| Profit After Tax (%, YoY) | 22 | 44 | -28 |
| EBITDA Margin (%) | 15.2 | 8.2 | 17.4 |
| EBITDA Margin (YoY, bps) | 369 | -32 | -655 |
| Order Book (₹ Cr) | 18,218 | 13,596 | N/A |
| 1-Year Forward (x, P/E) | 37 | 30 | 40 |
Why Mazagon Dock Stands Out Among Its Peers In Q1?
Although Mazagon Dock’s revenue growth moderated to 12% year-on-year during the quarter, its EBITDA grew at a much faster pace at 48%. Margins also expanded by over 370 basis points from last year to 15.2%, the strongest among the three.
Despite the quarter being a seasonally weak one, the company’s net profit grew by 22% from the year-ago period. A sharp reduction in provisions, from ₹540 crore last year to just ₹30 crore, played a big role in the company’s profitability growth.
Mazagon Dock’s current order book stood at ₹18,218 crore, of which 64% comprised of shipbuilding, and the rest from submarine and heavy engineering.
The P75I submarine contract is a major trigger for Mazagon Dock and the management has earlier indicated that the order book will cross ₹1 lakh crore in case the order comes through.
What Stood Out For Garden Reach Shipbuilders In Q1?
Garden Reach’s revenue growth of 39% was well ahead of street expectations, which had pegged that growth to be 22%. Its EBITDA growth of 33% was also above expectations.
The company is currently executing 11 projects across 44 platforms.
Another trigger for the stock going forward is the signing of the Next-Generation Corvette contracts worth ₹33,000 crore, which is likely to happen shortly. The management is eyeing a defence pipeline worth ₹1.5 lakh crore and a non-defence pipeline worth over ₹1 lakh crore.
Garden Reach’s capacity is also expected to rise from 28 to 32 ships by the end of this calendar year.
Why Did Cochin Shipyard Underperform In Q1?
Cochin Shipyard’s revenue fell 7% from the June quarter due to a high base, weak execution and lower revenue from the core ship repair business.
Margins also narrowed by 655 basis points from last year due to a rise in employee costs and a high base.
Shipbuilding margins stood at 5% at the end of the quarter, well below the guided range of 10% to 12%, while ship repair revenue was significantly lower, with margins narrowing to 34% from 44% last year.
The company has not disclosed its order book status either.
Despite having the weakest earnings trajectory, Cochin Shipyard’s valuations are the highest among its peers, at 40 times its one-year forward earnings, compared to Mazagon Dock’s 37 times and Garden Reach’s 30 times.
| Metric | Mazagon Dock | Garden Reach | Cochin Shipyard |
| Margin Trajectory | Strong | Flat / Slightly Lower | Sharp Contraction |
| Order Visibility | Very Strong | Very Strong | Strong |
| Near-term Catalysts | P75I | Capacity + NGC | Shipbuilding Execution |
Shares of Mazagon Dock Shipbuilders have risen only 4% so far this year, while those of Garden Reach have risen 6.6% so far. Cochin Shipyard’s shares have underperformed its peers on this aspect as well, with its stock having declined 9% year-to-date.
