Goldman Sachs has taken a bearish stance on two Indian shipbuilding companies, Mazagon Dock Shipbuilders Ltd. and Garden Reach Shipbuilders Ltd., initiating coverage with a "sell" rating on Thursday, October 22, 2026. The firm set a price target of ₹1,855 for Mazagon Dock, suggesting a 7% downside from current levels, and ₹1,515 for Garden Reach, indicating a 24% potential decline.
The investment bank cited three primary reasons for its bearish outlook. First, it noted that neither company has a significant presence in high-growth areas. Second, Goldman Sachs expects their EBITDA to decline at a 19.3% CAGR through financial year 2029, lagging behind the 26% growth projected for other aerospace and defence firms under its coverage. Lastly, the companies are trading at higher valuations despite smaller order books and weaker growth prospects compared to global peers.
Goldman Sachs described India's shipbuilding industry as lumpy, cyclical, concentrated, and long-gestation, with defence and military vessels making up nearly 75% of the domestic market. The firm also highlighted that defence orders often operate on fixed-price and cost-plus models, exposing the companies to cost variations and margin risks. Both firms are nearing the end of major delivery programs, with trailing book-to-bill ratios dropping to 1.37x for Mazagon Dock and 1.81x for Garden Reach.
Despite Goldman Sachs' bearish call, analyst consensus remains more optimistic. For Garden Reach, 11 analysts cover the stock, with seven recommending a "buy", two a "hold", and two a "sell". The consensus price target implies a 47% upside from current levels. Mazagon Dock is covered by 16 analysts, with eight "buy" ratings, three "hold" ratings, and five "sell" ratings, suggesting a 32% upside potential. Shares of Garden Reach and Mazagon Dock were down 5.2% and 5.1%, respectively, on Thursday.