What India’s ₹2.3-trillion naval push means for three key shipbuilders

The shift is underpinned by a naval modernisation pipeline of ₹2.3 trillion, with more than 60 vessels currently under construction and another 70-80 planned, according to Phillip Capital. Rising indigenisation, with domestic content in frontline warships now at 70-75%, has strengthened the role of Indian shipyards and improved long-term order visibility.

Policy support has also turned structural, led by the ₹69,700 crore shipbuilding and maritime development package and the grant of infrastructure status, enabling access to long-tenure, lower-cost financing. Against this backdrop, public sector shipyards remain at the centre of execution, supported by procurement norms that reserve the bulk of defence orders for domestic players.

Here are three companies that are expected to benefit significantly from the rapid growth in this sector.

Mazagon Dock Shipbuilders Ltd

Mazagon Dock Shipbuilders sits at the centre of India's naval shipbuilding ecosystem and remains the Indian Navy's most critical execution partner. It is the only Indian shipyard that can build surface combatants (destroyers and stealth frigates) and conventional submarines concurrently under one roof, which positions it as a direct beneficiary of India's naval modernisation and indigenisation push.

This capability underpins its role in flagship programmes such as the P-15B destroyers, P-17A stealth frigates, and the Scorpène submarine project. In addition, the domestic content in its platforms has risen to 75% in current programmes, up from 42% in older destroyers.

Its modernized facilities in Mumbai allow for the concurrent construction of 10 surface warships and 11 submarines. It has also recently upgraded its capacity, which now includes digital production systems, heavy-lift cranes, and a new 12,000-tonne floating dry dock, to enhance its repair and refit segment.

From an order-book perspective, the company is at an inflection point. As of September, the backlog stood at ₹27,415 crore, largely underpinned by ongoing deliveries of P-17A frigates and offshore platform contracts. This provides muted revenue visibility for about two years, based on FY25 revenue of ₹11,432 crore.

These recent deliveries have led to a temporary decline in the backlog, but the order pipeline remains strong. Mazagon Dock Shipbuilders expects to receive orders for three additional Scorpene submarines ( ₹36,000 crore) and the P-75(I) programme ( ₹70,000 crore) in the coming months. Successful closure of these contracts could push the order book above ₹1 trillion, materially improving revenue visibility.

Additional long-cycle opportunities include next-generation destroyers and frigates, reinforcing multi-year growth visibility. Mazagon Dock Shipbuilders has signed a memorandum of understanding (MoU) with Guidance, Tamil Nadu, to explore the development of a world-class greenfield shipyard on India's eastern coast. This aligns with the government's Maritime Amrit kaal Vision 2047.

The company has also entered into an exclusive MoU with Swan Shipyard to jointly bid for the Navy's landing platform dock project, valued at ₹35,000-40,000 crore. The company is boosting its repair capacity through the acquisition of Colombo Dockyard in Sri Lanka. About 50% of Colombo Dockyard's current revenue is derived from ship repair.

Through this acquisition, the company plans to divert more ship repair work from India to the Colombo facility. It expects this move to increase the facility's revenue by about 50% over the next two years, from the current ₹1,000 crore. This will help Mazagon Dock Shipbuilders reduce its dependence on the Indian Navy, which currently accounts for 80-90% of its order book.

Revenue in H1 FY26 increased by 9% year-on-year to ₹5,555 crore, primarily driven by significant deliveries during the half-year. However, operating margins declined from 21% to 16% due to a ₹1,000-crore provision for “onerous" contracts. Net Profit declined 6% to ₹1,200 crore.

Garden Reach Shipbuilders & Engineers

Garden Reach Shipbuilders &Engineers (GRSE) occupies a differentiated position in India's defence shipbuilding ecosystem. It combines scale in naval platforms with diversification across exports, ship repair and engineering. Unlike yards that focus on a narrow set of programmes, it has built execution depth across corvettes, frigates, patrol vessels and specialised platforms. This makes it a consistent beneficiary of India's expanding naval and coast guard capex cycle.

The company's strength lies in its order book and execution visibility. As of September, GRSE reported an order backlog of ₹20,206 crore. This provides about five years of revenue visibility, based on FY25 revenue of ₹5,076 crore. The order book comprises 10 distinct shipbuilding projects encompassing 43 individual platforms.

This is anchored by P-17A stealth frigates, ASW shallow-water craft, and next-generation offshore patrol vessels. Importantly, exports are emerging as a steady second pillar. It is executing orders for 12 multi-purpose vessels for German clients ( ₹5,400 crore), and a trailing suction hopper dredger for Bangladesh ( ₹95 crore).

Beyond the current backlog, GRSE is positioned for a materially larger set of opportunities. It is the L1 bidder for the ₹30,000 crore next-generation Corvette programme (a major Indian Navy initiative to acquire eight advanced, stealthy, multi-role warships for coastal defence, surveillance, and surface action) with contract finalisation expected in FY26. Management expects to close FY26 with an order book of more than ₹50,000 crore.

The company is eyeing about ₹1.5 trillion in potential orders for which ‘approval of necessity’ has already been granted. These include the P-17 Bravo project ( ₹70,000 crore), landing platform docks ( ₹35,000 crore), and mine countermeasure vessels ( ₹32,000 crore).

The company is expanding its capacity to manage its surging order book. It aims to increase its concurrent construction capability from 28 ships to 32 ships by 2026, with a further target of 40 ships through greenfield and brownfield expansions in the next three to four years. This is crucial as it will allow GRSE to fulfill large programmes without compromising delivery timelines.

GRSE also aims to diversify its revenue beyond shipbuilding, which contributed 88% of FY25 revenue. Ship repair is part of GRSE's broader effort to diversify its revenue streams beyond domestic defence shipbuilding. This shift is already evident; non-defense platforms now account for 17% of the order book, compared to 0% last year.

The company’s financials reflect its strong order book. Thanks to major projects such as the P-17 Alpha Advanced Frigate Project, revenue increased by 38% year-on-year to ₹2,987 crore in H1 FY26. Net profit surged by 48% to ₹274 crore. Despite this strong performance, the company maintained a conservative outlook of 25-30% revenue growth for FY26.

Cochin Shipyard Ltd

Cochin Shipyard Ltd (CSL) is India's largest public-sector shipyard and a critical pillar of the country's maritime infrastructure. Its strategic relevance stems from two factors that set it apart from its peers. It is the only Indian shipyard capable of building large vessels such as the INS Vikrant, an indigenous aircraft carrier. It also has a presence in the high-margin ship repair business.

This combination gives CSL a more balanced and resilient earnings profile across cycles. As of September, its order book stood at ₹21,100 crore, offering four to five years of revenue visibility. Orders from the Indian Navy and other defence entities account for roughly 66% of the order book. This concentration underscores CSL's strategic importance to the government of India. The commercial market and exports accounted for 24% of the order book, highlighting CSL's diversification beyond core defence contracts.

The company is transitioning after completing the indigenous aircraft carrier (IAC) programme, which previously dominated its revenues. Revenue from IAC is expected to fully peter out by FY26. The backlog is now anchored by long-cycle defence projects such as next-generation missile vessels ( ₹9,800 crore) and shallow-water craft.

Beyond its current orders, CSL is positioned to benefit from a defence opportunity pipeline of nearly ₹2.2 trillion. It is qualified for the proposed IAC-2 aircraft carrier ( ₹45,000 crore) project and is a strong contender for next-gen frigates and landing platform docks project. It has also submitted bids of ₹9,500 crore for projects such as next-gen fast patrol vessels and survey vessels.

There is an additional ₹65,000-crore funnel in the commercial segment, driven by domestic PSU fleet renewals and international demand for green technology. In addition, rising contributions from commercial and export orders support its order book.

CSL's key differentiator, however, remains ship repair. Unlike other defence shipyards, repair contributes a meaningful share of revenue. It accounted for more than 40% of revenue in FY25, supported by the commissioning of the international ship repair facility at Kochi, which positioned CSL as India's primary hub for complex commercial and naval repairs.

Management expects the facility to generate an additional ₹250 crore in revenue in 18 to 24 months, eventually growing to over ₹600 crore at full capacity. In addition, CSL has expanded its repair operations nationwide, with satellite units in Mumbai, Kolkata, and the Andaman and Nicobar Islands.

This allows CSL to handle 150-165 repair jobs a year. It has also signed an MoU with Maersk for repair and skilling. This partnership aims to repair at least one Maersk vessel at the Kochi facility by the end of FY26. Growth in the ship repair order book augurs well for CSL, as ship repair yields relatively higher Ebit margins (23-35%).

Revenue rose 6.7% year-on-year to ₹1,928 crore in H1 FY26, driven by execution of the order book. However, net profit declined by 22.7% to ₹289 crore, driven by a sharp decline in operating margins. The company expects revenue to grow by 14-15% in FY26 and 10-12% over the next 5 to 10 years, doubling by FY31.

Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.

The writer does not hold the stocks discussed in this article.

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