Shipyard Stocks Soar with Strong Order Visibility

The Defence Acquisition Council approved naval orders worth ₹8.45 trillion over FY22-25, with ₹2.35 trillion lined up in FY26-27. This presents a significant opportunity for listed PSU shipyards, including Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, and Cochin Shipyard, with combined order books expected to rise. Strong order visibility is likely to help shipyard stocks perform well.

The Defence Acquisition Council's approval of naval orders worth ₹8.45 trillion over FY22-25, with ₹2.35 trillion lined up in FY26-27, presents a significant opportunity for listed Public Sector Undertaking (PSU) shipyards. The strong order visibility is likely to bolster the performance of stocks in Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, and Cochin Shipyard.

Garden Reach Shipbuilders & Engineers (GRSE) has been a standout performer. The company's stock has surged 13% in June 2025, touching a 52-week high of ₹3,465.5, before closing 6.9% higher at ₹3,368 per share. This rally was driven by GRSE signing a Memorandum of Understanding (MoU) with Norway’s Kongsberg to build India's first Polar Research Vessel (PRV) [1]. The PRV project, valued at ₹600 crore, will be built at GRSE's Kolkata yard and is expected to enhance the company's capabilities in constructing complex maritime platforms.

Mazagon Dock Shipbuilders has also seen its stock rise, with a 53.1% year-to-date return. The company reported a 2.3% YoY rise in revenue to ₹3,174 crore in Q4FY25, but its net profit halved due to higher expenses. Despite this, Mazagon Dock expects revenue growth of between 8% to 10% and an EBITDA margin of 15% in FY26, backed by a strong order book [1].

Cochin Shipyard has seen its stock rise by 35.6% year-to-date. The company reported a 10.8% rise in net profit to ₹287 crore in Q4FY25, with revenue jumping by 37% from last year to ₹1,758 crore. The company's board announced a final dividend of ₹2.25 per share for FY24-25 [1].

The robust orderbook, government policy framework favouring indigenisation, and substantial government investment are key drivers of this positive momentum in defence shipbuilders' stocks. The Defence Acquisition Council's approval of orders worth ₹8.45 trillion over FY22-25, which is over three times the previous three years, indicates a potential for even bigger orders in the coming years.

References:

[1] https://upstox.com/news/market-news/stocks/garden-reach-hits-52-week-high-delivers-over-100-return-in-2025-mazagon-dock-cochin-shipyard-also-rally/article-171615/
[2] https://www.financialexpress.com/market/garden-reach-shipbuilders-surge-10-3-reasons-powering-the-rally-3868044/