TKMS: India's $8 Billion Submarine Order Nears Signature as Wismar Expansion Gets the Green Light

Germany clears internal approval for six P-75(I) submarines with TKMS and Mazagon Dock; India's Security Cabinet nod still pending.

Germany and India are on the verge of sealing a multi-billion-dollar defence deal covering six conventional submarines, with Berlin having cleared its internal approval process and signalling it could sign the government-to-government contract at any moment. German ambassador Jasper Wieck confirmed the procedural groundwork for the P-75(I) programme is complete.

The venture pairs TKMS with Indian shipyard Mazagon Dock Shipbuilders and carries an estimated total value of eight billion US dollars. Six boats featuring fuel-cell-based air-independent propulsion (AIP) would be constructed on Indian soil. New Delhi's Security Cabinet has yet to give its formal blessing, and once the contract is inked, delivery of the first submarine is targeted for seven years out, with one additional unit following annually thereafter.

For the Kiel-based naval group, whose market capitalisation stands at EUR 5.36 billion, the award would underwrite long-term utilisation of its technology division.

Wismar Clears a Planning Hurdle

Momentum is building on the domestic manufacturing front as well. On Thursday, the city council of Wismar approved changes to the zoning plan for the local shipyard site, opening the door to a plant expansion into which TKMS intends to plough roughly EUR 200 million. The keel-laying of the Polarstern 2 polar research vessel is also pending at the location.

Fresh tailwinds for Germany's surface-ship business stem from the reshuffling of earlier naval procurement decisions. After the defence ministry halted construction of six F126 frigates in June, TKMS captured the order for the Meko A-200 DEU frigate class.

Middle East Partnerships Take Shape

The company is simultaneously pushing new initiatives abroad, with cooperation embedded in the strategic security partnership between Germany and the United Arab Emirates.

Equity markets have taken note of the operational progress. The stock changed hands at EUR 84.70 on the day, up 28 percent since the start of the year, while ongoing deliveries proceed alongside the new project pipeline.

Analysts See Further Room to Run

Research houses remain constructive on the naval shipbuilder's prospects. Stifel initiated coverage on 18 September with a buy rating and a EUR 105 price target. The shares closed Thursday's session at EUR 85.20.

Bernstein Research added to the optimism on Monday, with analyst Adrien Rabier reiterating an "Outperform" call and a EUR 125 target. Rabier anticipates rising European defence spending through 2026 and average annual growth of four percent out to 2035.

Those assessments reflect Europe's shifting security landscape, as numerous states modernise their naval forces and award long-dated development contracts. That opens considerable opportunities for TKMS in future surface and sub-surface programmes.

Record Backlog Bolsters the Earnings Base

The operational foundation comes from the first nine months of fiscal 2025/26. Revenue climbed 19 percent year-on-year to EUR 1,890 million, while the order backlog swelled to a record EUR 20.1 billion. Adjusted operating profit advanced 13 percent to EUR 110 million over the same stretch. Management raised its full-year targets, with Handelsblatt reporting that the board is aiming for an adjusted operating margin of up to 6.5 percent.

Beyond the existing order book, the company is leaning on cross-border partnerships to cement its market position. Roughly three weeks ago, TKMS advanced talks with Fincantieri over underwater cooperation, and about two weeks ago it further developed the design for Germany's F127 frigate project alongside partners.

Investors Weigh Milestones Against Execution Risk

The maritime defence trend is visible in a steady share-price trajectory. The stock is up 29 percent year-to-date, yet trades 22 percent below its 52-week high. With the latest buy recommendations in hand, market participants are now focused on upcoming milestones in the newbuild programmes. High yard utilisation provides a stable cushion, but it also demands reliable delivery on budgets and construction timelines.