Five Shipbuilding Stocks to Watch as India Strengthens Ties with Japan

Strategic Indo-Japan Maritime Cooperation Sparks Investor Interest in Shipbuilding Stocks

As India and Japan move to deepen their strategic partnership in maritime security and infrastructure, investor attention is shifting toward India’s domestic shipbuilding industry. The two nations have recently outlined plans for joint shipbuilding projects, defense collaboration, and port modernization—a development that could provide a major boost to India's shipbuilding sector.

The Ministry of Defence and Ministry of Ports, Shipping and Waterways have welcomed Japanese participation in Make in India naval programs, with a specific focus on technology transfer and co-development initiatives. Industry experts believe this could be the start of a long-term trend benefiting Indian shipyards and associated companies.

Market Context: Maritime Partnerships in Focus

During Prime Minister Narendra Modi’s visit to Japan for the Quad Summit, maritime security and economic corridor discussions featured prominently. A bilateral working group has since been set up to explore joint shipbuilding and infrastructure investments.

“This could be a turning point for India’s maritime economy,” said Rajeev Malhotra, senior defense analyst at Strategic Insight. “India has the manpower and industrial base, and Japan brings in decades of high-end shipbuilding technology. The synergy is clear.”

The global shipbuilding industry is rebounding post-COVID as trade volumes normalize and military spending increases amid regional tensions in the Indo-Pacific. India, recognizing its strategic geography, is accelerating investments in its port infrastructure and naval capabilities.

Five Shipbuilding Stocks to Watch

Here are five Indian shipbuilding-related companies that could benefit from deepening Indo-Japan collaboration:

1. Cochin Shipyard Ltd (NSE: COCHINSHIP)

Cochin Shipyard, one of India’s premier shipbuilders, is actively involved in building vessels for both commercial and defense purposes. It recently secured defense contracts for Next Generation Missile Vessels (NGMV) and is working on India's indigenous aircraft carrier program.

Outlook: Analysts at ICICI Securities note that “Cochin is best placed to absorb technology transfer from Japanese firms given its government backing and shipbuilding pedigree.”

2. Mazagon Dock Shipbuilders Ltd (NSE: MAZDOCK)

A leading PSU under the Ministry of Defence, Mazagon Dock builds warships and submarines for the Indian Navy. With the government’s focus on self-reliant defense manufacturing, the company is expected to benefit from any Indo-Japanese joint naval programs.

Outlook: “Mazagon’s strategic location and defense capabilities make it a natural partner for future Indo-Japan naval ventures,” said Richa Vyas, a defense sector analyst at Axis Capital.

3. Garden Reach Shipbuilders & Engineers Ltd (NSE: GRSE)

GRSE has long supplied warships, patrol vessels, and support ships to the Indian Navy and Coast Guard. It is expanding its portfolio to include export-oriented builds.

Outlook: With Japanese companies looking to shift part of their production out of China, GRSE could emerge as a subcontracting hub, according to Jefferies India.

4. Larsen & Toubro (NSE: LT)

While L&T is a diversified conglomerate, its defense and heavy engineering segments are deeply embedded in shipbuilding, especially submarine manufacturing. The company has delivered Scorpene-class submarines in partnership with DRDO and the Indian Navy.

Outlook: Analysts highlight L&T’s technical expertise and private-sector agility as key strengths. “They could be ideal collaborators for Japanese firms wanting private joint ventures,” said Aditya Shah, equity research head at Motilal Oswal.

5. Reliance Naval and Engineering Ltd (NSE: RNAVAL)

Despite facing financial headwinds, RNAVAL is restructuring under insolvency proceedings and could present a turnaround story if foreign partnerships bring in capital and technology.

Outlook: “High risk, high reward,” is how Puneet Maheshwari, portfolio manager at FinEdge Capital, summarizes RNAVAL. "A potential revival with Japanese participation would be a major inflection point."

Analyst Commentary: A Sector in Transition

The Indian government has committed to increasing defense spending to 2.5% of GDP over the next decade, with a focus on indigenous capability development. Japanese firms such as Mitsubishi Heavy Industries and Kawasaki Heavy Industries are reported to be in early-stage talks for collaborative shipbuilding ventures.

“Japan sees India as a key strategic partner, especially in the Indo-Pacific,” said Malhotra. “This is not just defense diplomacy—it’s also industrial strategy.”

Investor Outlook: Long-Term Opportunity with Selective Risk

While shipbuilding stocks have historically underperformed broader indices due to long order cycles and capital intensity, the strategic tailwinds from this bilateral push could change the narrative.

Investors are advised to look at companies with strong balance sheets, visible order books, and alignment with government defense initiatives.

“Given the increasing focus on maritime capabilities, we expect valuations in select shipbuilding stocks to rerate over the next 12–24 months,” said Vyas of Axis Capital.

As India cements its position in the Indo-Pacific with Japanese support, the shipbuilding industry is poised to be a key beneficiary. For investors willing to take a long-term view, now may be the time to start tracking these stocks closely.