Defence Stocks Soar! Cochin Shipyard, Garden Reach, Mazagon Dock Surge 10% – Is It Time to Buy or Sell These Multibaggers?

Today, the share prices of major defence companies like Cochin Shipyard Ltd., Garden Reach Shipbuilders & Engineers Ltd., and Mazagon Dock Shipbuilders Ltd. jumped by up to 10%. Other defence stocks, such as Hindustan Aeronautics Ltd., Bharat Electronics, and BEML Ltd., also saw gains of up to 4%.

These defence stocks had faced a sharp decline recently, with some dropping as much as 30% since their peak in July. The fall was mainly due to the high valuations they were trading at, making the stocks less attractive to investors.

Strong Business Outlook for Defence Stocks

Despite the recent correction, the overall business outlook for defence manufacturers remains positive. There is strong demand in the domestic market, and there are plans to increase defence exports. These factors are expected to boost earnings growth. However, the market had already factored in much of this good news, leading to high valuations, explained Sunil Damania, Chief Investment Officer at MojoPMS.

With the recent correction, valuations are now more reasonable, but analysts advise investors to focus on specific stocks rather than the entire sector.

Garden Reach Shipbuilders’ Big Order Boosts Stock

One of the key drivers of today’s surge in defence stocks was Garden Reach Shipbuilders & Engineers Ltd. The company recently secured a large order for four additional multipurpose vessels, totaling eight vessels in all. The order, valued at about $108 million, is from Carsten Rehder Schiffsmakler and Reederei GmbH & Co. and is set to be completed in 33 months.

Analysts say such large orders are crucial for improving the earnings outlook and driving stock gains in the defence sector.

Future Prospects

As of September 16, Garden Reach Shipbuilders has a strong order book worth ₹25,230 crore, with many of these projects expected to be completed by FY26 and FY27. Analysts at Antique Stock Broking believe the company has more growth potential, especially with future orders for next-generation corvettes. They maintain a “Buy” rating for the stock, with a target price of ₹2,092, which suggests a potential 12% upside.