Ship Building & Allied Services Industry Playbook
Part of the Capital Goods sector India's shipbuilding industry is experiencing a multidecade revival driven by the Indian Navy's fleet expansion, Coast Guard...
Part of the Capital Goods sector
Industry Overview
India's shipbuilding industry is experiencing a multi-decade revival driven by the Indian Navy's fleet expansion, Coast Guard modernization, and the government's Make in India push for defence/strategic vessels. The global order book is also shifting to India as South Korean/Chinese yards are full.
Key characteristics
| Factor | Details |
|---|---|
| Order book | ₹35,000-50,000 Cr (majority defence) |
| Execution cycle | 3-7 years per vessel (long gestation) |
| Revenue model | Milestone-based billing (% completion) |
| Key driver | Navy: 170+ vessel plan, Coast Guard modernization |
| Margin profile | 8-15% EBITDA (defence higher, commercial lower) |
Key players
| Company | Type | Revenue | Order Book | Focus |
|---|---|---|---|---|
| Mazagon Dock (MDL) | DPSU | ₹9,000 Cr | ₹40,000 Cr+ | Submarines, destroyers, frigates |
| Cochin Shipyard (CSL) | CPSE | ₹4,000 Cr | ₹22,000 Cr | Aircraft carrier, commercial, repair |
| Garden Reach (GRSE) | DPSU | ₹4,000 Cr | ₹25,000 Cr | Frigates, corvettes, landing crafts |
| Goa Shipyard (GSL) | DPSU | ₹2,500 Cr | ₹18,000 Cr | Patrol vessels, naval offshore |
| Reliance Naval (defunct) | Private | Stressed | — | Failed private attempt |
🗣️
"Indian Navy ka 170+ ship plan hai agle 15-20 saal ka — itna order book kisi industry mein nahi milega."
What you will learn
- Industry Overview: Order composition, execution model, government linkage
- Key Metrics: Order book/revenue, execution rate, EBITDA margin, advance funding
- Competitive Landscape: DPSU monopoly, private entry, allied services
- Risks & Red Flags: Execution delays, order cancellation, single customer
- Valuation Framework: Order book based, EV/EBITDA, execution trajectory
1. Ship Building & Allied Services — Industry Overview
Ship Building & Allied Services (Capital Goods sector)
How shipyards make money
Revenue = Order Book × Execution Rate (% completed per year) Margin = Based on contract type (cost-plus for defence vs fixed-price commercial)
Revenue recognition model
| Milestone | % of Contract | Typical Billing |
|---|---|---|
| Steel cutting | 5-10% | Advance on order |
| Keel laying | 10-15% | Major milestone |
| Hull construction | 20-30% | Phased by % completion |
| Launching | 15-20% | Key milestone |
| Trials & delivery | 15-20% | Final payments |
| Post-delivery warranty | 5-10% | Retention money |
Order book composition (India)
| Type | % of Orders | Margin | Duration |
|---|---|---|---|
| Submarines | 30% | 12-15% | 7-10 years |
| Destroyers/Frigates | 25% | 10-14% | 5-8 years |
| Corvettes/OPVs | 20% | 10-12% | 3-5 years |
| Commercial (cargo/tanker) | 10% | 6-8% | 2-4 years |
| Ship repair | 10% | 20-30% | Days to months |
| Offshore/support | 5% | 8-12% | 2-3 years |
Ship repair — the high-margin segment
Ship repair (dry-docking, refits, life extension) is:
- Short cycle (weeks to months vs years for new-build)
- High margin (20-30% EBITDA)
- Recurring (ships need repair every 2-5 years)
- Cochin Shipyard: India's largest ship repair facility
Defence production — demand pipeline
| Program | Vessels | Value | Shipyard |
|---|---|---|---|
| P75I (submarines) | 6 | ₹45,000 Cr | MDL + foreign partner |
| P17A (frigates) | 7 | ₹50,000 Cr | MDL + GRSE |
| NGC (Next Gen Corvettes) | 8 | ₹30,000 Cr | GRSE + GSL |
| Fleet Support Ships | 5 | ₹15,000 Cr | HSL/CSL |
| Coast Guard vessels | 16+ | ₹8,000 Cr | GSL + private |
🗣️
"Shipbuilding mein order book = future revenue — 5-7 saal ki visibility milti hai, kisi aur sector mein aisa nahi hota."
2. Ship Building & Allied Services — Key Metrics
Ship Building & Allied Services (Capital Goods sector) | Company | OB/Revenue | Assessment | |||| | MDL | 45x | Exceptional visibility | | GRSE | 57x | Very...
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3. Ship Building & Allied Services — Competitive Landscape
Ship Building & Allied Services (Capital Goods sector) | Company | Specialty | Capacity | Competitive Advantage | ||||| | MDL (Mazagon Dock) | Submarines + d...
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4. Ship Building & Allied Services — Risks & Red Flags
Ship Building & Allied Services (Capital Goods sector) Indian shipyards have historically delivered 24 years late: | Project | Original Timeline | Actual | D...
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5. Ship Building & Allied Services — Valuation Framework
Ship Building & Allied Services (Capital Goods sector) | Company | EV/EBITDA | Context | |||| | MDL | 2035x | Submarine monopoly, highest margin | | GRSE | 2...
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