5 Shipbuilding Stocks Poised to Benefit from Union Budget 2025's Maritime Boost

In the Union Budget 2025, companies involved in shipping and maritime activities got a big boost. The finance minister announced the Shipbuilding Financial Assistance Policy.

Exemption of basic customs duty on shipbuilding and shipbreaking companies for 10 years and a maritime development fund with corpus of Rs 250 billion (bn), were also announced.

This comes at a time when India is trying to push its own manufacturing. But it's going to be an uphill task. At present, India has less than 1% of the global market share in shipbuilding.

The latest allocations in Budget 2025 signal a renewed push for self-sufficiency. Indian companies involved in this segment have a chance to capitalize on the boom.

In today's article, we look at 5 such shipping and shipbuilding stocks that are poised for growth following the Budget 2025 announcements.

#1 Mazagon Dock Shipbuilders

First on this list is of course Mazagon Dock Shipbuilders (MDL).

Mazagon Dock is one of India's most prominent shipbuilders, known for constructing warships, submarines, and offshore platforms.

With a legacy of over 800 vessels, including state-of-the-art destroyers and submarines, MDL plays a crucial role in India's defence sector.

In FY24, MDL's defence-related projects contributed 98% to its revenue, driven by key undertakings like the Project 17A frigates, Kalvari-class submarines, and Project-15 Bravo destroyers.

The company's current order book stands at excess of Rs 384 billion (bn), and it recently secured a contract worth Rs 3.5 bn for hybrid power vessels.

Coming to its latest financials, Mazagon Dock has reported a 29% year-on-year (YoY) growth in its consolidated net profit to Rs 8.1 bn for the third quarter of FY25.

The company's stock price has been under pressure for some time now, as majority of PSU stocks corrected from their peak after the sharp run up seen in the past 2 years.

Looking ahead, MDL plans to enhance its shipbuilding capacity with a new Rs 20 bn greenfield shipyard. The company is also eyeing growth in commercial ship repairs.

With a projected revenue increase of 10-12% in FY25, MDL is set for a steady upward trajectory, driven by expanding defence and commercial opportunities.

For more details, check out Mazagon Dock's financial factsheet.

#2 Cochin Shipyard

Second on the list is Cochin Shipyard.

Cochin Shipyard stands out as one of India's most modern and advanced shipyards.

It is India's first greenfield shipbuilding yard and the only shipyard with a shipbuilding capacity of 110,000 deadweight tons (DWT) and a repairing capacity of 125,000 DWT. The company has developed India's first indigenous aircraft carrier, INS Vikrant.

The company has cemented its position as a leader in constructing and maintaining maritime vessels, including tankers, bulk carriers, passenger ships and defence vessels.

In recent months, the company's stock price has been under pressure following earnings miss and owing to the overall correction in PSU stocks.

Earlier this week, Cochin Shipyard posted a 27% drop in its third quarter net profit at Rs 1.8 bn.

Prior to this, in the second quarter of FY25, Cochin Shipyard reported flat earnings on the operating front while its margins saw a slight decline to 18%.

Nevertheless, the company's robust order book, good execution capabilities, and expanding export share, position it for continued growth.

Government spending on defence will rise, with the Union Budget allocating additional funds to the sector. This further supports the outlook for Cochin Shipyard and its potential for a recovery.

The company is investing Rs 28 bn in infrastructure expansion, which includes a new dry dock and ship repair yard in Kochi. This will enhance its capacity to build and maintain large warships.

Additionally, the company's expansion into Mumbai, Kolkata, and Port Blair, along with the development of subsidiary shipyards in Kolkata and Malpe, underscores its commitment to strengthening India's defence capabilities.

For more details, see the Cochin Shipyard company fact sheet and quarterly results.

#3 Garden Reach Shipbuilders

Next on the list is Garden Reach Shipbuilders.

Garden Reach Shipbuilders & Engineers (GRSE) is a key player in India's defence shipbuilding industry, focusing on the construction of vessels for the Indian Navy and Coast Guard.

The company has built over 100 warships, including frigates, missile corvettes, and offshore patrol vessels. It also manufactures engineering products like portable bridges and deck machinery.

Earlier this week, GRSE reported a 11% YoY growth in its net profit for the quarter ended December 2024.

It's current order book stands at Rs 242 bn, with major projects including the P17 Alpha stealth frigates, anti-submarine warfare shallow water crafts, and survey vessels.

In the most recent quarter, the company's earnings were driven by strong project execution.

Along with results, the company's board also declared an interim dividend of Rs 8.95 per share.

Looking ahead, GRSE is focused on expanding its export footprint, with ongoing contracts for Germany and Bangladesh. The company also plans to enhance its green energy capabilities, having recently delivered a fully electric ferry.

The company is also expecting more orders in the coming months to bolster its strong order book position. With future orders in the pipeline and a 25% CAGR target over the next few years, GRSE is poised for continued growth in the defence and export markets.

For more details, check out Garden Reach's financial factsheet.

#4 Shipping Corporation of India

Fourth on the list is Shipping Corporation of India.

Shipping Corporation of India (SCI) is a Government of India company.

It's the largest Indian shipping company in terms of capacity with a diversified fleet profile. The company is involved in business of transporting goods and passengers.

SCI's owned fleet includes bulk carriers, crude oil tankers, and product tankers, container vessels, passenger-cum-cargo vessels, LPG carrier and offshore supply vessels.

The company recently posted its earnings for the third quarter of FY25. Its net profit dropped 44% YoY to Rs 755 million (m). Its revenue also fell marginally to Rs 13.2 bn.

Looking ahead, the company will be in focus as part of the divestment plan. The government plans to offload its 63.8% stake in the shipping major.

SCI's non-core assets, managed by the Ministry of Ports, Shipping, and Waterways, were demerged and listed separately on the exchanges as Shipping Corporation of India Land and Assets (SCILAL) in March 2024.

The Indian government's divestment of the Shipping Corporation of India (SCI) represents a transformative shift for the company.

Private ownership could possibly bring a sharper focus on profitability. While new management might implement changes to streamline operations and reduce bureaucracy.

Looking ahead, Shipping Corporation is keen on establishing a significant global presence, particularly in energy-related sectors, dry bulk shipping, and niche container markets.

For more details, check out its financial factsheet.

#5 The Great Eastern Shipping

Last on the list is G.E. Shipping.

The Great Eastern Shipping Company stands as India's largest private-sector shipping company, with operations spanning two primary sectors: shipping and offshore services.

In the shipping domain, the company specializes in transporting crude oil, petroleum products, gas, and dry bulk commodities.

Its offshore segment, managed through its subsidiary Greatship, supports oil companies with offshore exploration and production activities.

Serving a diverse clientele that includes oil firms, refineries, manufacturers, and miners, Great Eastern Shipping has established itself as a key player in the maritime industry.

GE Shipping recently entered into the container market. Prior to this, the state-run Shipping Corporation of India was the only Indian carrier operating in the mainline container shipping trade.

It's foray into container shipping is not without its challenges. Container shipping is a capital-intensive industry that requires significant investment in vessels, technology, and logistics infrastructure.

Despite these challenges, there are still opportunities for the company. One possibility is focusing on regional trade, particularly within Asia.

The intra-Asia trade route is one of the fastest-growing container markets, driven by the rise of e-commerce and the increasing economic integration of Asian economies.

Coming to its financials, the company's net sales have grown from Rs 35,089 m in FY22 to Rs 52,552 m in FY24, reflecting a compound annual growth rate (CAGR) of approximately 13.2%.

A key driver behind the company's growth is the substantial improvement in operating profit, which surged from Rs 16,877 m in FY22 to Rs 36,852 m in FY24.

With more than 70 years of experience and a diversified fleet along with rock-solid financials, GE Shipping's future looks exciting.

For more details, check out GE Shipping's financial factsheet.

Conclusion

Shipping will remain a significant economic contributor in the current world as 80% of world trade by volume and 70% by value happens via ships.

So, if India is to be a key player in the global supply chain, it must become a hub of shipbuilding and ship-recycling as well.

The conversion of diesel ships into green fuel vessels and the growing acceptance of 'Made in India' brands have brought a turnaround in the global shipbuilding market.

Indian shipbuilders are set to have a huge market for commercial vessels from Europe, France, Greece and the Middle East in the next five years.

All being said, make sure to conduct corporate governance checks and a thorough analysis of the underlying company's execution capabilities. Sustained research must not be compromised.

Happy Investing.

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