Defence Stocks Plummet Amid Market Volatility
Shares of major defence sector companies, including Mazagon Dock Shipbuilders, Cochin Shipyard, and Garden Reach Shipbuilders, have experienced significant declines, with losses reaching up to 28% over the past six months. This downturn reflects a broader slowdown in the defence sector, exacerbated by profit booking and market fluctuations linked to India-US tariff barriers. As investors react to these challenges, the outlook for these stocks remains uncertain.
Current Performance of Defence Stocks
Mazagon Dock Shipbuilders has seen its stock price drop by 26.30% in the last six months, currently trading at Rs 2,370, with a market capitalization of Rs 95,629 crore on the Bombay Stock Exchange (BSE). The stock’s Relative Strength Index (RSI) stands at 23.7, indicating a bearish sentiment with more sellers than buyers. In the latest trading session, approximately 30,000 shares changed hands, resulting in a turnover of Rs 7.08 crore. Notably, Mazagon Dock’s shares are trading below all major moving averages, including the 5-day to 200-day averages, suggesting a persistent downward trend.
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Similarly, Cochin Shipyard has faced a 27.28% decline in its stock price, which is currently at Rs 1,519. The company’s market cap is reported at Rs 39,976 crore, with an RSI of 21.3, reflecting a similar bearish sentiment. In the recent session, Cochin Shipyard also saw around 30,000 shares traded, generating a turnover of Rs 4.63 crore. Like Mazagon Dock, Cochin Shipyard’s stock is trading below all key moving averages, indicating ongoing challenges in the market.
Garden Reach Shipbuilders has experienced the most significant drop, with shares down 28.33% to Rs 2,232. The market capitalization for GRSE is approximately Rs 25,587 crore, and its RSI is at 26.6. The trading volume for GRSE was about 44,000 shares, resulting in a turnover of Rs 9.92 crore. The stock is also trading below all major moving averages, highlighting the prevailing market difficulties.
Brokerage Insights and Future Prospects
Despite the current challenges, brokerage firm Phillip Capital has initiated coverage on these three stocks with a positive outlook. They have set a price target of Rs 3,200 for Mazagon Dock, suggesting a potential upside of 36%. For Garden Reach Shipbuilders, the target is Rs 2,800, indicating a 26% upside. Cochin Shipyard is projected to have the highest potential, with a target of Rs 2,175, representing a 44% increase from current levels.
Phillip Capital emphasizes that India’s defence shipbuilding sector is on the brink of a significant transformation. The sector is evolving from a fragmented, policy-dependent industry into a strategic manufacturing hub. Despite India handling 95% of its trade through maritime routes, it holds less than 1% of the global ship production market share. The brokerage notes that over 60 naval vessels are currently under construction, with plans for an additional 70-80 high-value platforms, including next-generation corvettes and fleet support ships.
The Indian government has outlined a naval modernization plan worth nearly Rs 2.3 lakh crore, with 75% of procurement reserved for domestic vendors. This strategic shift is expected to provide robust, multi-year revenue visibility for companies like Mazagon Dock, Cochin Shipyard, and Garden Reach Shipbuilders, positioning them for potential growth in the coming years.
