Shares of major shipyard companies like Mazagon Dock and Cochin Shipyard are higher by up to 6 percent on September 3, in anticipation of an announcement of sizeable naval defence orders.
CNBC-Awaaz reported citing sources that the Defence Acquisition Council (DAC) - the apex body on defence-related procurements - is expected to approve deals worth Rs 1.3 lakh crore, including orders for seven naval warships. The order for new warships is expected to be to the tune of Rs 70,000 crore, sources told the TV channel.
This anticipated approval is generating optimism in shares of defence-related companies, as it signals increased government spending and further strategic investment, which are likely to benefit major players in the shipbuilding sector.
The increase in shipping stocks reflects a broader surge in interest for defence stocks, fueled by Hindustan Aeronautics (HAL) securing a Rs 26,000 crore order.
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At 11:23 am, Cochin Shipyard shares were trading 3.84 percent higher at Rs 1,922.40 on National Stock Exchange (NSE). Mazagon Dock was up 7 percent, Garden Reach Shipbuilders & Engineers (GRSE) was trading 6 percent higher. Shipping Corporation of India was also trading higher.
It is worth mentioning that in the coming three months the capability of Indian armed forces, particularly the Indian Navy will get a big boost as the deal indigenous construction of three additional Kalvari class submarines will be approved by the end of the year.
Even though the Indian Navy was expected to be a 200 warship force by 2027 as per long-term prospective plans, there is a time lag on the count of resources and procedures.
Given the deteriorating strategic environment in the Indo-Pacific, the Indian Navy is likely to approach DAC soon to build 10-12000-ton destroyers of advanced Project 15 class equipped with anti-ballistic missile systems and drone launch capability.
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