Mazagon Dock Shipbuilders shares in focus after Rs 1,990 crore order win; key details

Shares of Mazagon Dock Shipbuilders Ltd are in focus on Tuesday morning after the PSU secured an order valued at Rs 1,990 crore from the government to build an air-independent propulsion (AIP) plug for submarines. According to a release, the Ministry of Defence signed two contracts totalling Rs 2,867 crore for the construction of an AIP plug for the DRDO-AIP system and its integration into Indian submarines, as well as the integration of the Electronic Heavy Weight Torpedo (EHWT) onto the Kalvari-Class submarines. 

The contracts were signed in New Delhi on December 30, 2024, in the presence of Defence Secretary Rajesh Kumar Singh. The contract for the AIP plug construction and integration was awarded to Mazagon Dock Shipbuilders Limited in Mumbai for approximately Rs 1,990 crore.

The AIP technology is being developed domestically by the Defence Research and Development Organisation (DRDO). According to the release, "The project for constructing the AIP plug and its integration will improve the endurance of conventional submarines and make a significant contribution to the 'Aatmanirbhar Bharat' (self-reliant India) initiative. It will also generate approximately three lakh man-days of employment." The integration of the Electronic Heavy Weight Torpedo (EHWT) will be a collaborative effort between the Indian Navy, DRDO, and Naval Group from France. This integration will greatly enhance the firepower capabilities of the Indian Navy's Kalvari-class submarines, the release added.

Antique Stock Broking in its latest note on defence sector said while valuations, given earnings trajectory, are not unreasonable, the recent correction provides meaningful opportunity to accumulate defence stocks. It has Mazagon Dock Shipbuilders as its preferred pick. 

In the case of Mazagon Dock Shipbuilders, the brokerage is expecting award of three additional Kalvari-class submarines, with a potential value Rs 35,000 crore. The finalisation of P75I, 6 of AIP class submarines is on the horizon, it said recently.