India Defence Sector Outlook - Potential Submarine Orders In Focus: ICICI Securities

ICICI Securities Report

We have recently seen considerable interest in shipbuilders, particularly Mazagon Dock Shipbuilders Ltd., as the bidding for P75I project comes closer and the possibility of the order for three additional Scorpene submarines being finalised during PM Modi’s visit to France for the Bastille day parade.

In our view, the traction around submarine orders worth close to $8.6 billion is a positive development for Mazagon Dock Shipbuilders – the only Indian shipbuilder involved in the integration of submarines.

The last submarine INS Vagsheer of P75I project is undergoing sea trials and is likely to be delivered in FY24E. Hence, the potential fresh orders come as a shot in the arm for Mazagon Dock Shipbuilders.

However, the emergence of Spain’s Navantia and Larsen and Toubro Ltd. and Hanwah Ocean as potential bidders for P75I project implies competition to Mazagon Dock Shipbuilders-ThyssenKrupp Marine Systems.

Besides, the actual benefits might accrue progressively given these are high-value orders and ordering and execution cycle is prolonged, extending up to eight years. We will keep a close tab on the developments on this front.

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