India’s Rs 6 trillion maritime push meets 11X waterway growth: 2 dredging stocks to watch

As per the Ministry of Ports, Shipping and Waterways, India’s major ports handled a record 915 million tonnes (MT) of cargo in FY26, up from 855 MT in FY25. Their combined cargo handling capacity has also more than tripled, from 555 MTPA in FY14 to 1,681 MTPA in FY25.

The expansion is also moving inland. Cargo movement through national waterways rose 11x from 18.1 MTPA in FY14 to 145.5 MTPA in FY25 and 198 MMT by February 2026. As cargo movement increases, maintaining navigable depths creates a recurring need for both capital and maintenance dredging.

Government Pipelines Driving Inland Expansion

The government is supporting this expansion through a broad maritime development pipeline. Maritime India Vision 2030 includes more than 150 initiatives across 10 themes. This includes port infrastructure, shipping, waterways and shipbuilding.

Sagarmala is another key programme, with 845 projects worth ₹6.0 Trillion (₹1.0 Trillion is ₹1.0 lakh crore ). Of these, 315 projects have been completed, worth around ₹1.6 lakh crore. The focus is also shifting towards building a larger domestic shipbuilding ecosystem.

The Union Budget 2025 proposed a ₹25,000 crore Maritime Development Fund, while a ₹69,725 crore package covering shipbuilding assistance, maritime financing and capacity creation has also been approved. The Shipbuilding Development Scheme alone has an outlay of ₹19,989 crore and aims to increase domestic shipbuilding capacity.

This creates a clear link between shipbuilding and dredging. More ships require greater shipyard capacity, larger repair facilities and ports with channels capable of handling bigger vessels. New shipbuilding and repair facilities can therefore increase the need for deeper, well-maintained maritime infrastructure.

For dredging companies, the opportunity extends beyond one-time capital projects. Once ports, berths and waterways become operational, they require regular maintenance to remain navigable. Against this backdrop, let’s take a look at two listed dredging players in India.

#1 Knowledge Marine and Engineering Works: Diversifying Beyond Dredging

Knowledge Marine & Engineering Works is an integrated Indian maritime infrastructure company. The company has transformed from a specialised marine services provider into a diversified platform with capabilities spanning dredging, marine chartering, and shipbuilding. Today, it operates in ancillary port services, inland waterways, and maritime tourism.

Knowledge Marine provides capital, maintenance, and river dredging, as well as sand mining. The company is also involved in long-term chartering of utility vessels such as pilot boats, speed patrol boats, mooring boats, service boats, and tugs to various major port authorities in India.

Expanding the Moat: The ₹500 Crore Shipyard Pivot

The company is expanding from manufacturing small crafts to shipbuilding. It acquired 15 acres of waterfront land (with a 5-acre expansion option) in Palghar district to develop a shipyard. The facility is strategically located near Mumbai and the upcoming deep-sea Vadhavan Port.

This shipyard is expected to improve capital efficiency and capture more margin. Beyond current domestic orders for the Inland Waterways Authority of India, it expects export orders to start flowing in Q3 or Q4FY27. The company aims to deliver 14 vessels per year.

Order Book: Bidding on a ₹2,000 Crore Green Pipeline

In addition, the company is actively bidding on a domestic pipeline of over ₹2,000 crore. This pipeline is diversified across dredging (₹950 crore), green tugs (₹600 crore), and shipbuilding (₹400 crore).

The company secured two major 15-year contracts from Chidambaranar Port Authority and Visakhapatnam Port Authority worth ₹650 crore in Q1FY27. This establishes early leadership in India’s green shipping transition under the Maritime Amrit Kaal Vision. These long-term contracts provide the company with recurring revenue streams.

To push growth, Knowledge Marine plans to invest ₹400-500 crore. Approximately ₹100 crore will go toward shipyard development, while the remaining balance will be used to acquire new tugs and dredgers, including adding 12,000 cubic meters of hopper capacity.

Q1FY27 Financials: Dissecting the 466% Profit Anomaly

Financially, revenue from operations increased 138% year-on-year to ₹115.4 crore in Q1FY27. EBITDA (earnings before interest, taxes, depreciation, and amortisation) surged 268.2% to ₹73.4 crore, while margin expanded 2,248 bps to 63.6%. Consequently, net profit rose 466% to ₹62.7 crore.

The main driver for this growth was the recognition of approximately ₹60 crore in delayed billing from Q4FY26. It booked execution expenditures in Q4FY26 without recognising corresponding revenues. Consequently, the Q1FY27 billing carried minimal associated costs. This inflated the company’s blended EBITDA margin to 63.6%.

The Tonnage Tax Advantage

The early adoption of the Tonnage Tax Scheme also boosted profitability. Under this scheme, the core dredging and chartering operations are taxed based on fleet displacement tonnage rather than book profits. This effectively removes corporate tax from these segments, bringing the rate to under 0.1% of revenue. As a result, the tax rate has fallen to 4% from 17% in Q1FY26.

Knowledge Marine Share Price

#2 Dredging Corporation: Scaling Through Fleet Modernisation

Dredging Corporation of India operates within the shipping and dredging industry, which accounts for 100% of its turnover. The company is one of the largest companies in the domestic dredging market in the maintenance dredging segment for major ports.

Operations & Fleet: Managing India’s 7,500km Coastline

Its primary business involves maintaining navigational depths across India’s 7,500 km coastline. The company’s clientele includes major and minor commercial ports, the Indian Navy, shipyards, fishing harbours, and inland waterways.

To execute maritime operations, the company manages one of India’s largest dredging fleets. Its active fleet comprises 10 Trailing Suction Hopper Dredgers, 2 Cutter Suction Dredgers, 1 Backhoe Dredger, and several ancillary crafts. Its dredging capacity is 60 million m³ of material annually.

Why Operational Efficiency Drove the Q1FY27 Turnaround 

Dredging Corporation reported a significant financial turnaround, resulting in strong profits. Operating income increased 46.7% year-over-year to ₹355.4 crore in Q1FY27. EBITDA increased 32% to ₹61.9 crore, and margins were 17.4%. The company reported a net profit of ₹11.2 crore, a significant recovery from a loss of ₹23.3 crore.

This turnaround was driven by efficient fleet deployment and optimal resource utilisation. Looking ahead, Dredging Corporation’s fleet faces a significant challenge: an average age of over 23 years, leading to frequent breakdowns and high maintenance costs.

The ‘Atma Nirbhar’ Pivot: Modernising a 23-Year-Old Fleet

This fleet replacement cycle could be a long-term demand catalyst, particularly under the “Atma Nirbhar Program,” which prioritises indigenous construction to reduce reliance on foreign contractors. In fact, to modernise its fleet, the company is currently overseeing the construction of the Dredge Godavari with Cochin Shipyard.

This marks the company’s foray into deep-draft, high-capacity dredging to align with the deep-channel requirements of major Indian ports. This dredger is scheduled for commissioning in October 2026. This commissioning is expected to enhance capacity and improve the scale and growth profile in the medium term.

This agreement with Cochin is part of a larger program to build three dredgers, with the second scheduled for 2028. In addition, the company has entered the shipbuilding and heavy engineering sectors through partnerships. It has signed a Memorandum of Understanding with BEML to promote the indigenous manufacturing of dredgers and spare parts.

DCIL is backward integrating to diversify into new business areas. This strategy specifically includes expanding into shipbuilding and ship repair, and manufacturing spare parts.

Dredging Corporation Share Price

Decoding the Valuation Premium: High Growth at a Steep Price

Knowledge Marine has been growing faster. It also boasts a higher return on capital employed (ROCE) and return on equity (ROE) than Dredging Corporation. From a valuation perspective, Knowledge Marine is now trading in line with its 3-year historical median, but at a discount to the industry median. Dredging Corporation, by contrast, trades at a premium to the industry but at a discount to its historical median.

India’s maritime expansion is creating a long runway for dredging, supported by rising cargo volumes, port capacity, inland waterways and a growing shipbuilding ecosystem.

Disclaimer

Knowledge Marine offers a faster growth profile, backed by new dredging contracts, vessel additions and its ₹500 crore shipyard expansion. Dredging Corporation, meanwhile, offers scale and a fleet-replacement opportunity as India moves toward deeper, more efficient ports.

However, both companies trade at elevated earnings multiples, making execution and order conversion critical. You could keep these names on your watchlist to track execution.

Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. We used an alternative, widely used, and accepted source of information only when the data was unavailable.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.

About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.

A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.

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