Shipbuilders GRSE, Cochin Shipyard soar up to 16 percent, powering Nifty Defence index on continued momentum

Defence PSU Garden Reach (GRSE) posted a net profit of Rs 527 crore for FY25, a growth of 48 percent over the previous fiscal. The strong momentum has set the stock up for a 30 percent gain so far in 2025, and a 118 percent rise in the last one year.

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26 Aug, 2025 12:21

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Defence stocks extended gains on May 14, led by very strong momentum in shipbuilders, with Cochin Shipyard, GRSE and Mazagon Dock rising as much 16 percent to take the Nifty India Defence higher by more than three percent at close.

Shares of Mazagon Dock are up 23 percent in the last 30 days, while Paras Defence and Data Patterns have rallied up to 47 percent in this period.

Axis Securities in its latest note said the surge in defence shares was fuelled by expectations of increased orders. "This growth was fuelled by expectations of increased orders, which underscored India's military capabilities and the might of its indigenous weaponry following the recent conflict with Pakistan," said Axis Securities.

In a recent note, Antique Stock Broking said the listed defence shipyards sector is staring at a near three-fold increase in order inflows by FY27, as the Defence Acquisition Council's approval of orders worth Rs 8.45 lakh crore begins to unfold. The brokerage note said it sees continued opportunities for the three listed shipyard players - Cochin Shipyard, Garden Reach, and Mazagon Dockyard - on strong order outlook, a framework favouring indigenization, and anticipation of substantial further government investment in domestic shipbuilding capabilities.

Defence PSU Garden Reach (GRSE) posted a net profit of Rs 527 crore for FY25, a growth of 48 percent over the previous fiscal. The strong momentum has set the stock up for a 30 percent gain so far in 2025, and a 118 percent rise in the last one year. For the fourth quarter, GRSE posted a net profit of Rs 244 crore against Rs 112 Crore a year ago, a rise of 118 percent.

Commenting on the results, GRSE's CMD Commodore PR Hari (Retd) said, "With our strong order book, production maturity of the ongoing projects and order visibility including in the commercial shipbuilding segment, I am confident of even better performance during the current financial year." The management has already said it sees a CAGR of 20-25 percent over the next five years, and has high-value orders in the pipeline. Exports, which account for only 4 percent of the order book, is expected quadruple in the next four years, the company has said.

GRSE has also said that the P-17 Alpha project to build three advanced warships for Indian Navy is progressing well, and the delivery is likely by August 2025 and expected to be completed by the middle of next year, which should ramp up FY27 revenue and margins.

"The big projects, that is a P-17 Alpha, touch wood, we should be able to finish by mid of next year. So, the maximum revenue accrual will happen from this project," GRSE had said earlier this year.

Cochin Shipyard is extending gains, higher by over 13 precent in early trade on May 14 after partnering with Drydocks World, to develop ship repair clusters to boost India's maritime sector. "The partnership is set to play a pivotal role in developing a world-class ship repair ecosystem to serve both domestic and international fleets. It will also bolster India’s offshore fabrication capabilities and support marine engineering training and skilling initiatives," the management of Cochin Shipyard said. As part of the agreement, joint work will commence at Kochi dock as a first step, and plans are afoot to expand the collaboration across India.

In March this year, the Defence Acquisition Council (DAC) had approved the Acceptance of Necessity (AoNs) for eight proposals worth over Rs 54,000 crore for engines of T-90 tanks, Varunastra Torpedoes and Airborne Early Warning & Control Aircraft systems.

India’s defence production has grown rapidly last year since the launch of the Make in India push, with exports rising to an all-time high of Rs 23,622 crore in FY25. Compared to the last ten years, defence exports have surged from Rs 686 crore in FY14 to an all-time high last year, marking a 34-fold growth. India’s export portfolio of defence items includes bulletproof jackets, Dornier (Do-228) aircraft, Chetak helicopters, fast interceptor boats, and lightweight torpedoes.

As mauch as 65% of India's defence equipment is now manufactured locally, underscoring the increasing self reliance, with private sector contributing 21% to total defence production, showed government data. Going forward, India has a target of Rs 3 lakh crore worth of defence production by 2029, and aspires to be a global manufacturing hub. The Ministry of Defence approved a record 193 contracts during FY25, worth over Rs 2 lakh crore, with 92 percent going to the domestic industry, worth Rs 1.69 lakh crore.