Stocks to Watch – Mazagon Dock, L&T in line for big Defense order; expert tells why these stocks are his favourate

Big development for Mazagon Dock and Larsen & Toubro (L&T). The Ministry of Defense has given its approval to a proposal given to it by the Indian Navy. The tender for 6 conventional tenders will soon be released. The estimated value of this order is around Rs 43,000 cr. This will be the first project under the Strategic Partnership Policy launched by the government in May 2017. This project is named as ‘Project 75-India’. To know more on this, see this report by Zee Business’ Deepanshu Bhandari.

Bhandari said that six submarines will be manufactured under this project and these submarines will be 50 percent bigger than the Scorpene Class Submarine. These submarines will be capable of carrying heavy duty firearms including land attack and anti-cruise missiles.

The submarines will also be capable of launching 18 torpedoes simultaneously, Bhandari said. Who will benefit from this order? Bhandari said that investors of L&T and Mazagon Dock should keep an eye on this development. Only these two companies have been shortlisted for these two orders, he further said.

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This Anchor and Head Research at Zee Business said that only Mazagon Dock and L&T have the capabilities to manufacture submarines of this size and ability.

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But, the two companies are now required to partner five foreign companies which have been shortlisted and later have to submit their financial bids, Bhandari said. The order will be given based on the financial bids submitted by the two companies.

The five foreign shortlisted companies are Russia’s, France’s Naval Group DCNS, Thyssenkrupp Marine Systems of Germany

This order may not stop here, he said adding that the Navy requires 18 smaller submarines and these orders could as well fall in the kitty of these two companies.

The Indian currently have 15 conventional and 2 nuclear submarines. Mazagon Dock is already manufacturing 6 Scorpene Class submarines for Indian navy under Project 75 India, he said. The company has already delivered four submarines.

The stocks of Mazagondock gained over 5 per cent on NSE on Friday and were trading at Rs 229.20 at the closing time. Meanwhile, the stocks of L&T ended at Rs 1536.15, up by over 1.6 per cent.

Expert Sandeep Jain said that L&T remains as one of his favourite large cap and Futures & Options (F&O) stocks. He said that this news is a big positive for this company.

Mazagon Dock is another favourate for Jain, he said. He said that this stock is very cheap in terms of valuations. He said being a PSU stock, it is a slow mover but considering dividend yields, it is a fantastic stock. He recommended a Buy on it.