Cochin Shipyard Ltd

NSE:COCHINSHIP

Earnings Call Analysis

Equity Split, Dividends, and Order Backlog

The company completed a share split and distributed dividends totaling INR 197 crores. They have an order backlog of INR 21,500 crores, including large defense and commercial contracts, and orders for European clients. The EBITDA margin guidance is 19-20%, excluding other income, though executives suggest this high margin may not be sustainable in all future projects.

Operational Highlights and Defense Sector Achievements

In the third quarter of FY '24, the company made considerable operational achievements, notably with defense projects. A significant contribution to revenue was made by two projects, the delivery and commissioning of INS Vikram, an aircraft carrier, and the construction of Anti-Submarine Warfare Shallow Water Crafts (ASW SWC) for the Indian Navy, valued at about INR 6,300 crores.

Financial Performance and Debt-Free Status

Financially, the company has reached an enviable position of being practically debt-free, reflecting a strong balance sheet. EBITDA margins stood at a robust 34%, including other income, and profit after tax (PAT) margins were an impressive 23%, which underscores the company's successful financial management.

Dividends and Shareholder Returns

The company also returned value to its shareholders by declaring two interim dividends for FY '23-'24, with a total payout amounting to INR 197 crores, indicating a commitment to rewarding investors and providing consistent returns.

Extensive Order Backlog

The total order backlog for the company stands at a substantial INR 21,500 crores. This includes INR 16,064 crores from defense projects and INR 2,260 crores from domestic commercial projects. Furthermore, export orders are also contributing significantly, with orders worth around INR 2,588 crores. This extensive order backlog ensures a steady stream of revenue in the upcoming periods and is a marker of the company's strong market position and trust among clients.

Future EBITDA Margin Expectations

Looking forward, the company anticipates EBITDA margins to stabilize around 19-20% on a blended level, excluding other income. This projection is based on current and forthcoming project mixes, and while not sustainable at the 34% figure reported within the past 9 months, it still denotes a high level of operational efficiency and profitability.

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the Q3 FY '24 Results Conference Call of Cochin Shipyard Limited hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Channi Shandi from Kirin Advisors. Thank you, and over to you, ma'am.

[Unknown Attendee]

Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Cochin Shipyard Limited. From management side, we have Mr. Madhu Nair, Chairman and Managing Director; Mr. Jose V J, Director of Finance; Mr. Rajesh Gopalakrishnan, Chief General Manager of Ship Repair; Mr. Hari Krishnan, Chief General Manager, Shipbuilding; Mr. Shibu General Manager of Finance; Mr. Sham Kamal, who is Company Secretary. Now I hand over the call to Mr. Madhu Nair. Over to you, sir.

[Madhu Nair, executive]

Good evening to all present in this conference call. I'm Madhu Nair, Chairman and Managing Director of Cochin Shipyard Limited. I would like to extend a warm welcome to all the participants who are joining us today. I'm joined by Sri Jose V J, our Director of Finance; Sri Rajesh Gopalakrishnan, Chief General Manager of Ship Repair; Sri Hari Krishnan S., Chief General Manager, Shipbuilding; Sri Shibu John, General Manager, Finance; and Shri Sham Kamel, our Company Secretary.

I would like to bring to your attention, operational achievements in the third quarter of FY '24. Two major defense projects stood out during this period. Firstly, INS Vikram, the aircraft carrier delivered in September -- commissioned in September 2022 by the Honorable Prime Minister. This project played a significant role in generating revenue for both Shipbuilding and Ship Repair during this quarter.

The second noteworthy project involved the construction of ASW WC for the Indian Navy with an estimated overall value of about INR 6,300 crores. The progress on this project has been good, and we are happy to inform you that 3 vessels were simultaneously launched on 30th November 2023, which is probably a first for such projects of the Indian Navy. Currently, on these 3 vessels which have been launched, the machinery outfitting works are underway. Additionally, 2 more vessels, that's vessel #4 and 5 in the series had their key 8th December 2023, and currently hold block correction is in process. The remaining 3 vessels, that's vessel #6, 7 and 8 are also in the advanced stages of block fabrication.

On the commercial front, on the multipurpose vessel projects, 8 numbers which we are executing for European clients, also contributed during this quarter. With respect to new orders, CSL has received several important orders in the third quarter until this date. In October 2023, the Ministry of Defense entered into a contract with CSL for a mid-life upgrade and repowering of a level platform at a cost of [ INR 313.42 crores ]. This project is expected to be completed in 24 months and involves the modernization and upgradation of various systems and the equipment on board the ship to enhance its operational capability. We consider this as a significant order win because this could set the context for such projects into the future.

Furthermore, in December 2023, CSL signed a contract, again with the Ministry of Defense for a value of INR 488.25 crores. This contract entails the repair and maintenance of equipment and systems onboard INL Vikram. The full work is expected to be completed by the first quarter of FY '25. Additionally, on the shipbuilding front, on January -- in January 2024, CSL secured orders from a European client for the design and construction of 1 hybrid SOV, service operation vessel. The project cost for this firm order is estimated to be approximately INR 500 crores with the vessel scheduled to be delivered in 2026. The vessel is designed and built to cater to the service, maintenance and operational needs of the offshore wind farm industry in the European market while sustainable energy solutions are in high demand. It is significant, again, from the point that this again is a hybrid SOV.

In early February 2024, we have signed shipbuilding contracts for advertising medium of 2 India Naval vessels. This is -- we filed a multiple contract because it's 2 resets together, so these multiple refit contracts valued at around INR 150 crores include drydocking refits as well as upgradation of equipment on board the ships.

Now I would like to go through other achievements during the period, which I also consider worth mentioning here. CSL successfully delivered 2 electric hybrid 100-pack vessels to the Cochin Water Metro project, a venture which has had considerable significance and visibility nationwide. The replication of this project in various regions is underway, and the contract for 8 vessels with similar configuration has been awarded by the Water Authority of India to Kosice Limited, and 2 of them have already been delivered in January and has certainly been positioned, 1 each at Iodia and

We started the fabrication of steel-cutting and fabrication of the trailing section of built by CSL for [indiscernible] India. Our subsidiary company, Purchaser Limited, CSL has delivered the first 62-ton bollard-pull tug to Osiparsel Limited, which is now part of the VariGroup, which is the leading operator in Asia. Also, the has been laid for the second 70-ton [indiscernible] for Polar Limited. Members may be aware that CSL has contracted to build 2 [indiscernible] 62-ton for and 2 numbers, [indiscernible] for Pollstar.

Also, CSL, fabrication has commenced for 2 numbers, 3,800-ton dry cargo vessels being constructed for mass supporting Norway, which is part of a 6-vessel series. This forecast of CSL venture into the global shipbuilding arena. It's worthwhile and we take pride in informing that CSL, the main unit for Limited has been upgraded to the GreenCo, GreenCo Gold rating. We were earlier rated at CII GreenCo Silver by the continuation of the Indian industry under the GreenCo framework. So this upgradation from GreenCo Silver to Greencore Gold is in line with the efforts being put by CSL to upgrade its green and environmental footprint.

The confidence that our greening efforts will establish a benchmark for building our repair yards in India has also give confidence to various looking to build green ships in the entire country is encouraging for Cochin Shipyard Limited.

Moving on to the financials, I would like to mention that our financial results for the third quarter were indicative of positive growth. These results were uploaded on 30th January 2024, and I'm sure that all of you have gone into that detail. I would request Mr. Joe VJ, Director, Finance, to briefly touch upon the results for the half year.

[V. Jose, executive]

Yes. Good evening, everyone. The financial performance of the company during the period were in line with our expectations. In the third quarter of FY '24, the company witnessed a significant increase in turnover, reaching INR 1,214 crores compared to INR 631 crores in the third quarter of FY '23, demonstrating a growth rate of 62 percentage. Similarly, the profit before tax for the FY '24 also showed remarkable improvement with INR 346 crores as opposed to INR 151 crores in Q3 of FY '23, indicating a growth rate of 129 percentage.

Moreover, the profit after tax for FY '24 stood at INR 248 crores, a substantial increase from INR 188 crores -- INR 118 crores in Q3 of FY '23, reflecting a growth rate of 109 percentage. When considering the year-to-date performance, the company experienced overall growth in turnover and profitability. The year-to-date turnover of FY '24 amounted to INR 2,420 crores, making a 38% increase compared to the previous year turnover of [indiscernible]. Additionally, the year-to-date profit before tax reached INR 748 crores, showcasing a marked improvement from previous year's INR 390 crores, representing a growth rate of 92 percentage.

Similarly, the year-to-date profit after tax was recorded at INR 548 crores, indicating a growth rate of 91 percentage when compared to the previous year of INR 287 crores. Furthermore, the company redeemed its tax-free infrastructure bonds amounting to INR 600 crores in December 2023, which reduced the total debt to just INR 23 crores as of current date. As a result, the company has practically become a debt-free company. In terms of the financial indicators, the company achieved a strong EBITDA margin of 34 percentage for the 9-month period ended December 23. The margin includes other income also.

[Madhu Nair, executive]

24.

[V. Jose, executive]

That is excluding other including upper income is 34 percentage. Additionally, the profit after tax, the PAT margin achieved during the same period was 23 percentage, further emphasizing the company's financial success. That's all from my side.

[Madhu Nair, executive]

Thank you. The Board of Directors of the company, at a meeting held on 7th November 2023, had approved split of equity shares having face value of INR 10, each fully paid up. The 2 equity shares of the face value of INR 5 is fully paid up. Shareholders approved the proposal on 13th of December 2023, and the speed of it shares were effective from 10th January 2024.

Also, the company's board at the recent meeting held on 30th January '24, have declared second income dividend of [ INR 3.550 ] per share of face value of INR 5 each post split for FY '23, '24, which is repaid by end of this month. This is in addition to the first interim dividend of the [indiscernible] per equity share of the face value of revised each, which is presplit, which was declared by the Board at its meeting held on the held on 7th November '23. The total payout to the shareholders on account of these 2 internal dividends is INR 197 crores.

Moving on to the status of various vessels of construction. For the [indiscernible] project for the Indian Navy, a total of 8 is being constructed at a cost of about INR 6,300 crores. The status has already been covered earlier in my talk. Regarding the hybrid electric catamaran vessels for [indiscernible] 23 water contractors. Out of these 12 assets have already been delivered, remaining 11 are in various stages of construction. For the 7 multipurpose vessel project for European clients, it [indiscernible] of being constructed. Vessels 1 and 2 are currently undergoing block correction and outfitting. The vessels 3 to 8 are under various stages of construction.

Regarding the Commissioning Service Operations Project, CSOP project, 2 vessels are being constructed. cutting for the vessels was done on September 1, 2023, and computation is currently in progress. The fabrication for 1 number, 12,000 cubic meter trailing section open range being constructed by CSL for DCI started on the 11th of December 2023. The pilot project of one of our hydrogen fuel cell vessels, equipment capacity has been completed and the advanced stages of testing and feed trials at this moment.

[indiscernible] hybrid electric catamaran passenger vessels from IWA at a cost of about INR 129 crores. Two of them have already been delivered in January as was mentioned earlier. And the balance uses are at various stages of construction at our subsidiary in Gugliujishwar Lane. Coming to the 2 major expansion projects we undertaken by CSL, namely the new drydock project with a cost of INR 1,799 crores, and the international ship repair facility, ISR project costing INR 970 crores. The civil cost for both the projects have been completed and the projects were inaugurated by the Honorable Prime Minister Narendra Modi on 17th January 2024. The ceremony was also attended by the governor of Kerala, the Kerala, the Unit Minister of Port Shipping and Waterway and other high-level dignitaries. By meeting...

[Technical Difficulty]

About owner shipbuilding. And should we have an order book of about INR 800-plus crores. This is what we normally guide, a little bit lower, but I would like to conclude now and we'll be happy...

[Operator]

Should we start for the Q&A session?

[Rajesh Gopalakrishnan, executive]

Yes, yes.

[Operator]

[Operator Instructions] The first question is from the line of Rohit from

[Unknown Analyst]

Congratulations on a good set of numbers. Sir, if you could just help me with the order backlog position, including the IAC work, both in Shipbuilding and Ship Repair?

[Madhu Nair, executive]

What was it, the order backlog?

[V. Jose, executive]

Got [ INR 21,500 crores ] mentioned by the CMD only the order backlog. Out of that, IASC ais INR 1,047 crores. And we received INR 5,215 crores. In GMV, that is new deration is INR 9,802. For total from defense is around INR 16,064 crores. And on the commercial front the 1,200 passenger vessels INR 286 crores, then the INR 32 crores, IWAI [indiscernible] and reefer DCI around INR 869 crores. So that comes to around INR 2,260. That is on the domestic front.

Then the export order, the 7,000 multipurpose INR 734 crores. CSO for a European client is INR 955 crores and zero-emission feeder container vessel, 2 numbers again to another European client is INR 547 crores. And SOV for another European client is INR 452 crores, which we recently signed the contract. So the total export around INR 2,588 crores. Then subsidiaries, we have a total order book of around INR 700 crores, so totally INR 21,500.

[Unknown Analyst]

Thanks, sir. From the context of the EBITDA margin front, how sustainable is this about 20% kind of EBITDA margin as we conclude this IAC?

[V. Jose, executive]

Not sustainable, but after ESC, we will be around 19% to 20% level EBITDA, excluding other income.

[Unknown Analyst]

Even in ASW, you mean to say the EBITDA margin can be or even NGMV can give you 19% to 20%?

[Madhu Nair, executive]

We would not like to discuss exact project wise, but largely, the guidance would be 19% level.

[V. Jose, executive]

On a blended level.

[Madhu Nair, executive]

On a blended level because we operate different business of building different businesses. On both sides, commercial and defense are different distributors. So we would probably -- that is from getting into specific projects and that kind of detail is because it's a little bit too complex.

[Unknown Analyst]

Got it, sir. From an order inflow perspective, especially on IMS Vishal, would you want to make any remarks? As in any conversation about it, it will be really helpful, sir.

[Madhu Nair, executive]

We probably are not in a position to make any comment on risk for the

[Unknown Analyst]

Any other order inflows in pipeline like next projects we have been hearing for a long time. Any color on those aspects? Any additional AN...

[Madhu Nair, executive]

Not yet, not yet.

[Unknown Analyst]

No, that means in terms of the conventional defense order inflow, it looks big, right?

[Madhu Nair, executive]

The RFP issued as of now is, there is RFP for INR 1,600 crores for defense projects. But there are expectations, which I may not be able to discuss, but over this year, within 2024 calendar year, we are expecting further RFPs to come in.

[Operator]

And the next question is from the line of Deepak Krishnan from Kotak Institutional Equities.

[Deepak Krishnan, analyst]

So just wanted to understand this change in margin guidance because I think last quarter, you had indicated that CSL would be some segmental level is 13%, 14%, so the 2% is 19% should be 13%, 14% on a landed basis. We made '16/'17, like any particular reason for this sharp sort of political increase in guidance? And addition, any one-off factors that did numbers?

[Madhu Nair, executive]

We're probably not getting you very clear on the line because there's too much of a booming voice coming in. Can you repeat that question one again?

[Deepak Krishnan, analyst]

Is it better now?

[Madhu Nair, executive]

Just go ahead. Let me see.

[Deepak Krishnan, analyst]

Yes. I just wanted to understand the 200 bps improvement in margin. So you had last quarter indicated that the building was 13%, 14% and 18%, 19%. Blended basis are at 17%.

[Madhu Nair, executive]

Yes. This quarter, as was mentioned earlier, we had the aircraft carrier, both on the Shipbuilding side and the Ship Repair side, which has helped us a little bit more on the margins.

[Deepak Krishnan, analyst]

Sir, I'm talking about long-term steady state like we are seeing 19% we will do. I just wanted to understand the factors like which is higher than 16%, 17% which you normally indicated?

[V. Jose, executive]

The 19% indicated was post ISC period, post aircraft credit.

[Deepak Krishnan, analyst]

Yes, yes.

[Madhu Nair, executive]

Just a minute, just a minute.

[Deepak Krishnan, analyst]

Sir, can you hear me fine now?

[Madhu Nair, executive]

See when you're talking the margin level, like it's -- you mentioned that we have conveyed earlier 17%, 18% kind of level, and we are now talking 19% kind of level. Is this what you said?

[Deepak Krishnan, analyst]

Yes, yes.

[Madhu Nair, executive]

Yes. That is actually coming through when we say 17%, 18% and what we are trying to project into the future, it is a little bit a percentage here and there will always happen. But when we are talking, you would have also seen that on the Ship Repair side, we said we are sitting on a slightly more higher firm order book. So we know that Ship Repair is going to contribute a little bit more over the next few years as we move forward. There is a higher level of confidence the kind of large projects, the multi refit contracts that come in the midlife upgrade contracts that come in.

We are getting signals that this could all be sort of sustainable into the future. These are -- these could be the method that's sustainable to the future. So those holders are too hard on to whether it's 18% or 19%, it's somewhere around that level. That is all we would like to say, yes.

[Deepak Krishnan, analyst]

Sure, sir. Maybe just on the 2 new facilities. Do we have any work in hand for the ship repair under new tie-off? Or would that be something that comes up over time?

[Madhu Nair, executive]

The shipbuilding dock, the new dock, the current orders, the dredger will actually be built in the new docks. And then there are further vessels already scheduled and planned into the new dock. For the shipper, we expect to go and secure orders as we move forward. We don't think that it will be too much of a difficulty to get the orders for our higher facility, which is for ships below 130 meters long. We are firmly entrenched in that segment. There's quite some volumes available.

[Operator]

[Operator Instructions] The next question is from the line of Raj Rishi from DCPL.

[Raj Rishi, analyst]

Just wanted your comments on how big this Ship Repair can become for you. I believe the increase in capacity is, what, 25% of India ship repair capacity.

[Madhu Nair, executive]

By numbers, by numbers or cost...

[Raj Rishi, analyst]

Okay. And I also read that you had mentioned in a recent interview that you're looking at a cluster in Maharashtra region also for Ship Repair. So being such a labor-intensive sector, the Ship Repair, what's the edge which you would have, say, internationally to get international orders also?

[Madhu Nair, executive]

So there are 2 parts to the question. The first one you asked was what could be the size of the business from whatever we currently have. There is units we have right now in Cochin, the new ISRF and the units in Mumbai, Calcutta That's what we currently have. So that is something which I'm not sure whether we have said this earlier, but then we should be seeing INR 1,200 crores very shortly and scaling it up to a INR 1,500 crore kind of level in a few years. So that is a picture which we have painted on Ship Repair.

Now 1 thing we have talked about a new cluster on the West Coast, it's something which we are in discussion. And that would be actually to try and tap larger ship, whatever we have built till now is not the new ISRF and the 3 units which we have is all for The only large facility is actually at Limited, the main unit. But what -- if all goes well and final assessments are clear, then if you do something in the West Coast, that would be for slightly more larger type of vessels trying to tap the international market.

And you are seeing a very pertinent question. With the kind of labor inventory work, we need to actually work with best around or next to best around turnaround times in the world to attract business. The confidence is there, the plans are yet to evolve.

[Raj Rishi, analyst]

And sir, what's the labor arbitrage, say, if an international ship comes here versus some other country, what's the labor arbitrage? What's the advantage which India would offer?

[Madhu Nair, executive]

I don't think the labor arbitrage is the most important part here. It is actually the skill sets and the capability to drive world over Ship Repair has in pockets and clusters. For some time, there will be labor arbitrage, that is for sure. But we would not want to do anything into the long term looking at labor arbitrage because that will be gone after some time. So it will all be best-in-class turnaround time worldwide and best-in-class capabilities, which is the confidence level. So it may not be the arbitrage on the labor, but it is trying to actually plug into the global ship repair ecosystem.

[Raj Rishi, analyst]

And I also read an interview which you had mentioned that the size of the -- this global ship repair industry is like massive. And I think India is, what, 1% or something. What would be your reasonable vision as to what kind of percentage can it go to, India?

[Madhu Nair, executive]

I may not be able to talk on that total percentage from a country perspective. But as we say, from a CSL perspective, I said INR 1,500 crores in a not faraway future. But then maybe you should add another INR 1,000 crores to it from Cochin Shipyard point of view over the next 10 years or so, something like that.

[Raj Rishi, analyst]

And sir, just regards to green shipping, I think you had mentioned in the earlier call that around 2,500 ships are ready for their life is begin of life. So do you think most of them will go for green shipping or it will be just like fossil fuel?

[Madhu Nair, executive]

No, they will all go for some sort of green. All these vessels will have some green part in it. It could be hybrid, it could be So it may not be fully green but it will all have some part of it green. That is for sure.

[Raj Rishi, analyst]

And sir, these 2,500 ships which you had mentioned, in how many years would it be like all of them would have to go for like some new ships have to...

[Madhu Nair, executive]

The general take is in about 10 years' time.

[Raj Rishi, analyst]

In 10 years. And you would expect very, very good business from there, like?

[Madhu Nair, executive]

It is actually about our execution capabilities. We have now contracted 8 ships in Cochin Shipyard from German clients, another 6 in our subsidiary. It will really be -- once we deliver these vessels from a quality perspective, time perspective and how beneficial it's been for the clients, that will decide how things will move into the future. But as we're speaking, we feel confident we feel good.

[Raj Rishi, analyst]

Okay. And sir, recent news item, you mentioned some African country delegation, which had come to questions...

[Madhu Nair, executive]

A very, very preliminary reach out. It's also got to [indiscernible], but there are...

[Raj Rishi, analyst]

Hello? Hello?

[Madhu Nair, executive]

We're not sensing any business on that at this stage, but we'll take it forward. We'll see what.

[Operator]

And the next question is from the line of Rohit from

[Unknown Analyst]

My question will be more to do with the capacity complementation that we have had in the -- what is the peak Shipbuilding venue execution you could do theoretically in a given year?

[Madhu Nair, executive]

That's a very tough call. That depends on the type of projects we are able to garner and the type of the projects that would come up in the market. So because that would be a very difficult question to answer because if it's a naval project, I would say a conventional commercial vessel or whether it's a functional vessel, it will depend on that because that turnover, it also ripens. It's not just the execution of the shipbuilding capabilities. It is also the equipment which goes in because the turnover is a sum of the not just the execution but the equipment also. So if it's a functionally costly ship, then the turnover could be high. So that could be a question which we would not like to answer stay.

[Unknown Analyst]

Sir, let say put that question in a different way. We have somewhere like 110,000 [indiscernible] service capacity. Is it fair to assume that the correct...

[Operator]

The line for the current participant has been disconnected, so we will take the next question. [Operator Instructions] The next question is from the line of Vignesh from Wealth.

[Unknown Analyst]

I just want to understand your guidance for FY '25 along with EBITDA margins. Hello. Sir, am I audible?

[Madhu Nair, executive]

Finance, can you just explain that?

[V. Jose, executive]

[indiscernible] we may achieve the all-time high turnover. We achieved recovered. And next year, we may add another 12 to 15 percentage above that. That is a broad guidance I can give.

[Unknown Analyst]

Okay. So approximately, it should be INR 3,400 crores for the year, and it should be around INR 3,700 crores approximately for next year?

[V. Jose, executive]

Put in a broad way.

[Unknown Analyst]

Got it. And EBITDA margin should be around 18% to 19% as you have stated it approximately?

[V. Jose, executive]

Yes, yes.

[Unknown Analyst]

Okay. And how for the orders from the Europe, sort like hybrid vessel, green, are you seeing positive inquiries coming up for the next year?

[Madhu Nair, executive]

We are, there are inquiries. We are hopeful that we will be able to convert a few of those because these are all in various stages of discussion, but there are inquiries. There's no dearth of inquiry.

[Unknown Analyst]

Okay, okay. And other things, any passenger ships kind of thing where in the waterways where our government is focusing on tourism kind of things, are we getting any orders in such a manner there?

[Madhu Nair, executive]

I'm not in a portion to discuss orders at this stage. And the smaller vessels, especially for the in-line water space, there are discussions that would be largely handled by our subsidiary from Kolkata. That is our thinking. HCSL, Hooghly Cochin Shipyard.

[Unknown Analyst]

Okay. So but discussions are going on in...

[Madhu Nair, executive]

There are discussions happening, yes.

[Operator]

And the next question is from the line of Viraj from Jupiter Financial.

[Unknown Analyst]

Consolation in outstanding numbers, my question is regard to the previous participant. Are you guiding 15% growth from the pre-COVID levels? So that should be in the range of [ 3,000, 700 to 800 ] top line? And what would be the tax margin would be in the range of 18%?

[V. Jose, executive]

At margin may not be in the 18% level because next year, we will have the depreciation portion of the new CapEx which we commissioned. So part margin, it may be lower, but EBITDA level, it will be around 18% to 19%, 19% are the guide.

[Unknown Analyst]

The price should be in range of 15% to 16%, and that should be the...

[V. Jose, executive]

Yes, because after considering the depreciation of the additional depreciation from the new projects, that's correct.

[Unknown Analyst]

Okay. And there was an article in one of the newspapers where said that they would be interested in having 2 different -- 2 aircraft carrier. Any comment on that?

[Madhu Nair, executive]

See, the Navy has gone on record on that matter. But regarding a contract or any further discussions, we would not have any comments.

[Operator]

[Operator Instructions] The next question is from the line of Raj Rishi from DCPL.

[Raj Rishi, analyst]

Some companies have commented on, like, India's advantage for them because of the geopolitical situation. People are a little averse to China and the political reach, which the present establishment has global south, et cetera, et cetera, is helping their cause in getting business. So how would you comment as far as what would you comment on this as far as Cochin's share is concerned?

[Madhu Nair, executive]

Let's see, overall field for India is looking very positive. And we have been a little bit of an early mover in this space, especially in West Europe. And right now, with the geopolitics, we feel it's much better positive coming in. So it's definitely looking good for us.

[Raj Rishi, analyst]

Okay. So this -- do you get help from the government to government level also, like you have to solicit business on your own?

[Madhu Nair, executive]

We do it on our own. Government is not getting involved in the business.

[Operator]

And the next question is from the line of Vignesh from...

[Unknown Analyst]

Just want to the opportunity. Apart from Europe, are we targeting any other geographies as such?

[Madhu Nair, executive]

Not really at this stage.

[Unknown Analyst]

Okay. So basically, we are seeing like execution or the orders are pulled from the Europe side, execution will be a challenge about in your opinion, sir?

[Madhu Nair, executive]

Europe, our strength we have built up is a little bit towards Europe, which is quality, other product, engineering strength of the organization, trust that we have built up over the past 20 years with various clients in Europe, visibility in Europe. And especially since Europe is looking at significant vessels to be built, we really see no return at this stage to check other geographies at this stage. We are aware of what could happen in other places. But right now, we are focused on Europe other than what we are seeing in the country on our defense and whatever is happening within the country.

[Unknown Analyst]

Okay, understood. Just a little bit more on Europe orders. Why are you seeing it as the replacement demand or the new ships, which is being coming up for the orders with us?

[Madhu Nair, executive]

So Europe, 2 types of demand is what we are taking. One is in European short sea vessels, which are various type of cargo, multipurpose vessels plying largely within Europe. These are largely old vessels. Average age of the fleet could be getting close to 20 years. And naturally, they would need replacement. And when they are getting replaced, they will not get replaced by old class design. They will get replaced by newer technologies and lesser emission vessels or what we call the green or the hybrid vessels. So that is one part of the demand.

The second part of the demand what we are focused on is the wind energy market, which is emerging in Europe and requirement for service and support vessels in the wind farm fields. Now this is expected to peak from 2027 onwards. So right now, there are various agencies finding it time to start doing the investment into this segment. And we are getting into that circuit.

[Unknown Analyst]

Sir, just a bit more on the energy. Why do these ships come in after how does it work for the market et -- just to understand more on that.

[Madhu Nair, executive]

It's [indiscernible] question. All I can just explain is the wind energy in Europe, being in the tropics, wind energy is going to be dominating the energy transition into the future, and these are largely going to be offshore field. So it will be offshore field. When you install fixed offshore with towers or floating wind towers, these days about 10 megawatt each tower and countries are rolling out their own scale, for example, U.K. is talking about 25 gigawatt. Various other countries are talking about. So once the field come up with multiple thousands of wind towers in the field, all these wind mills will need continual maintenance and support. And you need a lot of specialized ships in the field to go ahead and service this market. We are trying to look at that support various types of support ships.

[Operator]

And the next question is from the line of Deepak Krishnan from Kotak Institutional Equities.

[Deepak Krishnan, analyst]

Just wanted to check because you said that the margin increase and all of the large number of [indiscernible] recent contracts. So when you indicate [indiscernible] crores for the top line, that also includes these medium reset orders or those are largely booked in Shipbuilding? And how big a pipeline is get...

[Madhu Nair, executive]

On the medium refit whatever we said, that is all or the midlife upgrades and, it will all be [indiscernible] And as we move forward, we feel, as you rightly pointed out, the shipment at turnover goes up, and we can hold our business types as we are doing right now, that will be positive for the company as we move forward.

[Deepak Krishnan, analyst]

What could be the size of this research market right now or maybe, say, next 2, 3 years, what is the size that Cochin Shipyard has targeted?

[Madhu Nair, executive]

As I said, these are very, very fluctuating figures. That's why we wouldn't want to stick to exact figures. But right now, visibility could be INR 1,200 crores in a year or 2, INR 1,500 crores in 3 [indiscernible] This would be roughly where we would like to be.

[Deepak Krishnan, analyst]

And maybe just sort of understanding if there's any update on IAC potential anything that you kind of things that could happen?

[Madhu Nair, executive]

Not yet, not yet. Not yet. We both are on the same page whatever is in public domain on also.

[Deepak Krishnan, analyst]

Okay, sir. Those are my questions. Maybe just 1 more follow-up. Any guidance that you've given for next year and sort of lost out on the call in between?

[Madhu Nair, executive]

We just conveyed this a bit.

[Deepak Krishnan, analyst]

Sorry, I got dropped off. Could you just repeat that?

[Madhu Nair, executive]

What we had said is like for this year, we would exit our all-time best turnover targets. And for the next year, that's for FY '25, we would try to raise it by 12 to 15 percentage on top of that.

[V. Jose, executive]

Does that answer your question, sir?

[Deepak Krishnan, analyst]

Yes, it does.

[Operator]

As there are no further questions from the participants, I now hand the conference over to management for closing comments.

[Madhu Nair, executive]

Thank you for the participants, and we are happy to have a few securing into the company. We continue to have these engagements taking forward. And whenever there is any significant events or developments in the company, we'll appropriately convey it to the market. Thank you. Thanks for your time. Thank you.

[Operator]

On behalf of Kirin Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.