Mazagon Dock, Cochin Shipyard, other shipbuilding stocks surge on hope of major contract

Shipbuilders on rise: On Tuesday, the shares of the top shipbuilding companies recorded a strong positive momentum against the flat tone of broader markets on the hope of positive developments from the Defence Ministry’s Defence Acquisition Council (DAC) which is likely to meet on today, September 3. 

As of 02:02 pm, the shares of Mazagon Dock Shipyards were trading at 5.79 per cent while Laxmipati Engineering recorded a 4.99 per cent uptick. Other key stocks including Garden Reach Shipbuilders, Cochin Shipyard, and Knowledge Marine & Engineering Works were trading at 4.42 per cent, 2.26 per cent, and 2.08 per cent respectively. 

According to the media reports, the council will discuss the approval of many mega defence acquisition projects, potentially worth nearly Rs 1.2 lakh crore. The key project under investors’ radar includes seven new-gen frigates (P-17B) which could be valued at around Rs 70,000 crore along with 1,700 future-ready combat vehicles, valuing Rs 50,000 crore approximately. 

In terms of performance in the last six months, Mazagon Dock Shipyards and Coshin Shipyards have handsomely rewarded their investors with over a nearly 112 per cent return each. 

Any positive development from the council will generate optimism for the defence-related companies, signalling increased spending in the Government’s strategic investments which will benefit the major defence equipment manufacturer in the country. 

The government is also focusing on increasing the capabilities of the Indian Navy amid the challenging environment in the Indo-Pacific Ocean with the approval of indigenous construction of three additional Kalvari class submarines by the end of the year.