Mazagon Dock begins talks with Navy on ₹70,000-crore submarine project P-75(I)

Mazagon Dock Shipbuilders Ltd on Wednesday (September 10) said it has begun negotiations with the Indian Navy for the long-delayed submarine programme Project P-75(I).The move comes after the Ministry of Defence granted approval in August for the state-run shipbuilder to start cost talks with Germany’s Thyssenkrupp Marine Systems to build six conventional submarines, in a deal valued at nearly ₹70,000 crore. Sources had earlier told CNBC-TV18 that the contract is likely to be awarded to Mazagon Dock and Thyssenkrupp about six months after successful completion of cost negotiations.

Mazagon Dock and Thyssenkrupp signed a memorandum of understanding back in June 2023. Under the agreement, the German defence firm was slated to handle engineering and design, while Mazagon Dock would be responsible for constructing and delivering the six submarines to the Indian Navy.

Brokerage firm JPMorgan recently flagged limited positive triggers for the project in a note, reiterating its ‘underweight’ stance on Mazagon Dock with a price target of ₹2,468.It cited an adverse risk-reward outlook despite the stock’s nearly 30% correction from a peak of ₹3,775. The company’s earnings in the past two quarters were impacted by provisions related to cost overruns, though management has indicated that margins are likely to recover going forward.

Meanwhile, Mazagon Dock is set to be included in the Nifty Next 50 index from the end of September as part of the NSE’s biannual rejig, which could provide another boost for the stock.

Shares of Mazagon Dock ended higher by over ₹70 at ₹2754.85 on the BSE today, September 10.