At a Glance
Swan Defence is basically the zombie of Indian shipbuilding—bleeding money yet the stock has risen 5× in a year because “defence theme”. Q1 FY26 continues the tradition: loss ₹31 crore, sales literally ₹0 crore, OPM -7,529%. With a market cap ₹1,694 crore and P/B 5.7×, investors are paying premium for… hopes, dreams, and maybe warship orders that don’t exist.
Introduction
Once known as Reliance Naval & Engineering (remember those days?), now Swan Defence is trying to rise from the ashes of bankruptcy. But Q1 FY26 results show it’s still stuck in dry dock—literally and financially. Sales? Almost negligible. Losses? Consistent. Equity? Wiped out. The only thing floating is the stock, buoyed by defence sector hype. The company is armed with the world’s largest dry dock but not with profitable orders. Investors are betting on a turnaround; auditors are betting on antacids.
Business Model (WTF Do They Even Do?)
Swan Defence builds and repairs ships, rigs, and heavy engineering stuff. In theory, they should be minting money with India’s defence push. In practice, they build more losses than ships. They have the infrastructure—662×65 m dry dock, capacity 4 lakh DWT—but orders are missing. Debt restructuring and ownership changes brought in Swan Energy, but until the order book fills up, it’s all asset-rich, cash-poor.
Financials Overview
- Q1 FY26 Sales: ₹0 crore (flatlined)
- Operating Profit: –₹32 crore (OPM: –7,529%)
- PAT: –₹31 crore (slight improvement from –₹53 crore Q4 FY25)
- EPS: –₹5.92
TTM revenue a joke (₹7 crore), TTM losses huge (₹161 crore). Book value ₹56, stock trades at 5.7× BV, meaning hope > reality.
Valuation
How do you value a company with no sales and negative equity returns?
- P/E: Not applicable (loss-making).
- P/B: 5.7× vs peers 1–2×, so either “next Mazagon Dock” or “next bankruptcy”.
- EV/Revenue: Infinite (sales almost zero).
🎯 Valuation range: Pure speculation; realistic fair value ₹50–₹80, hype value ₹300+.
What’s Cooking – News, Triggers, Drama
- Ownership under Swan Energy has improved sentiment; defence order pipeline rumored.
- AGM notice and new Articles approved in Q1—corporate housekeeping, not game-changers.
- Government’s defence indigenization push is a potential lifeline.
- No confirmed large order announcements yet.
Balance Sheet
| Metric | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Total Assets | ₹2,785 cr | ₹2,743 cr | ₹2,892 cr |
| Borrowings | ₹2,148 cr | ₹2,219 cr | ₹2,505 cr |
| Equity | ₹548 cr | ₹477 cr | ₹296 cr |
| D/E | 3.9× | 4.6× | 8.4× |
💬 Auditor remark: Debt-to-equity ratio screams “help!” while equity is melting faster than glaciers.
Cash Flow – Sab Number Game Hai
| Year | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | ₹1,428 cr | –₹70 cr | –₹97 cr |
| Investing CF | ₹12 cr | –₹11 cr | –₹162 cr |
| Financing CF | –₹1,460 cr | ₹91 cr | ₹269 cr |
Cash generation is non-existent; survival is via external funding.
Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | –46% | –46% | –46% |
| ROCE | –4% | –6% | –5.7% |
| P/E | N/A | N/A | N/A |
| PAT Margin | –1,000%+ | –1,500%+ | –1,494% |
| D/E | 3.9× | 4.6× | 8.4× |
💬 Ratios more red than a submarine warning light.
P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY23 | ₹3 cr | –₹33 cr | –₹2,086 cr |
| FY24 | ₹7 cr | –₹108 cr | –₹182 cr |
| FY25 | ₹7 cr | –₹111 cr | –₹161 cr |
💬 Three years, same story: no revenue, huge losses.
Peer Comparison
| Company | CMP (₹) | Sales (₹ Cr) | ROE | P/B |
|---|---|---|---|---|
| Mazagon Dock | 2,721 | 11,700 | 34% | 13.8 |
| Cochin Shipyard | 1,718 | 4,528 | 16% | 8.1 |
| Swan Defence | 322 | 7 | –46% | 5.7 |
Roast: Swan is priced like a mini Mazagon but performs like a sinking dinghy.
Miscellaneous – Shareholding, Promoters
- Promoter Swan Energy holds 94.9%—public float minuscule.
- No FII/DII interest; purely retail hype.
- No dividends ever.
EduInvesting Verdict™
Swan Defence is the ultimate turnaround gamble. Infrastructure is world-class, promoter stake high, and defence tailwinds strong. But fundamentals remain wrecked: zero revenue, massive losses, insane leverage. The only bull case is a mega defence order that turns assets into cash machines. Until then, it’s a speculative bet, not an investment.
Strengths:
- Huge infrastructure, strategic asset
- Strong promoter commitment
- Defence sector policy tailwinds
Weaknesses:
- No meaningful revenue
- Continuous losses
- High leverage, negative ROE
Opportunities:
- New defence contracts
- Government backing
- Capacity utilization turnaround
Threats:
- No orders → insolvency risk
- Rising interest costs
- Regulatory or funding delays
Final Take:
At ₹322, the stock is all about hope vs. numbers. If orders flow, it’s a multibagger; if not, it’s déjà vu of Reliance Naval. High risk, high reward, but auditors keep their life jackets ready.
Written by EduInvesting Team | August 2025
SEO Tags: Swan Defence, Q1 FY26 results, shipbuilding stocks, defence sector India, turnaround stocks
