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Defence Sector – Govt clears construction of six advanced submarines from Mazagon Dock

ICICIdirect Research 29 Aug 2025 DISCLAIMER

Cabinet Committee of Security (CCS) has granted clearance to the Defence Ministry and MDL to begin negotiations with Germany’s ThyssenKrupp Marine Systems for the construction of six advanced submarines under Project-75 India. Valued at over ₹ 70,000 crore, the deal will feature Air Independent Propulsion (AIP) technology, enabling submarines to stay submerged for up to three weeks. 
MDL is expected to receive this order in the next 6 - 9 months after completing negotiation process. Post this order, total order backlog is expected to reach Rs 1 lakh crore (8.5x TTM revenue), providing strong revenue visibility. 
We believe that another large contract of 3 additional scorpene submarines (value expected ~Rs 32000 crore) is also under advanced stages and expected in this year. Management also guided that company's order backlog would reach Rs 1.25 lakh crore after these two major contracts (as against current backlog of ~Rs 30000 crore). 
Along with MDL, other companies such as Bharat Electronics (BEL), Astra Microwave, Data patterns are also expected to gain from this contract in supplying indigenous communication and electronic warfare systems etc.    
We remain positive on the defence sector, considering the strong focus on increasing capital outlay for indigenised platforms and reducing procurement timelines of these platforms. This gives strong visibility on orders inflows in coming years and faster execution.
We recommend MDL (target price of 3160), BEL (target price of 450), Astra Microwave (target price of 1270), and Data Patterns (target price of 3130)

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