The Indian-listed defence shipyards sector could see nearly a 3x increase in order inflows by FY2026–2027 on the back of the Defence Acquisition Council's approval of orders worth Rs 8.45 lakh crore, according to a latest report by Antique Broking. In its May 12 report, the brokerage noted that it sees continued opportunities for the three listed shipyard players—Cochin Shipyard, Garden Reach, and Mazagon Dockyard—on the back of a strong order outlook, a robust policy framework favouring indigenization, and substantial government investment.
At close, the stock for Cochin Shipyard was trading nearly 3.8 percent higher at Rs 1,578.90, Mazagon Dock Shipbuilders also closed 3.6 percent higher at Rs 3,010 and Garden Reach Shipbuilders & Engineers closed around 5 percent higher at Rs 1916.10.
Optimistic on order opportunities
"The procurement pipeline for defence warships is substantial, though it is often subject to multi-year delays. Nevertheless, based on industry interactions, we have a fair degree of confidence and visibility on key big-ticket orders worth Rs 2,12,000 crore that are likely to be placed during FY26–27," the report says. These big-ticket orders include a repeat order of three Kalvari-class submarines, the P75I Submarine order, next-generation corvettes, and P-17B frigates.
On an individual basis, the brokerage expects the order book for Mazagon Dock to increase by 5x by the end of FY27. Similarly, for Garden Reach, the brokerage estimates an order book of around Rs 1.2 lakh crore. "GRSE’s present order book stands at Rs 23,880 crore, with major projects on track to be executed in the next 3–4 years," the brokerage adds. On the other hand, for Cochin Shipyard, the present order book stands at Rs 22,500 crore, which, according to the brokerage, provides revenue visibility of almost five years. The brokerage adds, "As compared to MDL and GRSE, the company’s order pipeline is relatively muted due to the deferral of the IAC-II order. As a result, the stock may underperform MDL and GRSE, given inferior revenue visibility."
Defence stocks experienced a price correction during July 2024–March 2025, followed by a strong rebound in April, "primarily triggered by the geopolitical flare-up on the western border and the government’s approval of orders worth Rs 54,000 crore". Hence, given the long-term earnings potential in defence shipyards, they note that they expect these stocks to likely trade up to 45x FY27 core earnings.
Antique continues to maintain a positive stance on Mazagon Dock Shipbuilders with a Buy rating and a target price of Rs 3,433, based on a target P/E multiple of 45x FY27 earnings. Similarly, for Garden Reach Shipbuilders, the brokerage has a Buy rating and target price of Rs 2,024.
On the other hand, the brokerage notes that for Cochin Shipyard, their price outlook is "closely tied to the ordering of an aircraft carrier (IAC-II), on which there is a lack of consensus over the urgency and size of the vessel," as a result of which the brokerage has "tempered" its stance on the stock. The brokerage has a Hold rating with a Rs 1,481 target price, based on a P/E multiple of 42x core FY27E earnings.
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