Defence Stock with an Order Book Exceeding Market Cap – A Must-Watch for Investors
Defence Stock : The Indian defense sector has been on a strong growth trajectory, with several companies securing significant orders, backed by the government’s push for indigenous defense manufacturing. One such stock that stands out in this space is Garden Reach Shipbuilders & Engineers Ltd (GRSE). With an order book of ₹23,877 crore, which is 71% higher than its market capitalization of ₹13,925 crore, this PSU stock deserves a close watch.
Stock Performance and Price Movement
GRSE’s stock opened at ₹1,300, marking a 0.32% gain from the previous close of ₹1,295.75. The stock reached an intraday high of ₹1,314.75, up 1.46%. Over the past year, the stock has delivered a 45% return, and in the last five years, it has surged by an impressive 570%.
Order Book & Recent Developments
GRSE’s order book as of December 31, 2024, stands at ₹23,877 crore, reflecting strong revenue visibility for the coming years. The company specializes in shipbuilding and also manufactures diesel engines and ship deck machinery while undertaking engineering projects like steel bridge construction.
Recently, the company signed an MoU with Apollo Micro Systems to drive next-generation defense innovation. Additionally, GRSE secured a contract for the construction and delivery of 7,500 DWT Multi-Purpose Vessels (MPV) in Hamburg, Germany.
Financial Performance
GRSE has demonstrated strong financial growth, with a 33.69% YoY increase in revenue from operations. The company’s Q3FY25 revenue rose to ₹1,343.13 crore from ₹1,004.61 crore in Q3FY24. On a quarter-on-quarter (QoQ) basis, revenue grew 9.39% from ₹1,227.83 crore in Q2FY25.
Net profit for Q3FY25 stood at ₹98.19 crore, reflecting an 11.26% YoY increase from ₹88.25 crore in Q3FY24. However, on a QoQ basis, net profit saw a marginal growth of 0.42% from ₹97.77 crore in Q2FY25.
About Garden Reach Shipbuilders & Engineers (GRSE)
Established in 1884 and headquartered in Kolkata, GRSE is a leading defense shipyard specializing in the design and construction of naval warships such as frigates, corvettes, and patrol vessels. It has also built commercial ships including bulk carriers and tankers.
A key strength of GRSE is its focus on indigenous production, with over 90% of its ships for the Indian Navy and Coast Guard having domestic content. The company plays a crucial role in India’s Atmanirbhar Bharat (self-reliant India) initiative in the defense sector.
Key Financial Ratios & Market Metrics
| Metric | Value |
|---|---|
| Market Cap | ₹14,002 Cr. |
| Current Price | ₹1,222 |
| 52-Week High/Low | ₹2,835 / ₹673 |
| Stock P/E | 35.5 |
| Book Value | ₹161 |
| Dividend Yield | 0.77% |
| ROCE (Return on Capital Employed) | 27.4% |
| ROE (Return on Equity) | 22.2% |
| Face Value | ₹10.0 |
| Promoter Holding | 74.5% |
| Debt to Equity Ratio | 0.01 |
| Price to Earnings Ratio | 35.5 |
| Pledged Percentage | 0.00% |
| QoQ Profit Growth | 0.43% |
| Quarterly Profit Variation | 11.3% |
| Industry P/E | 39.5 |
| Graham Number | ₹353 |
| Intrinsic Value | ₹963 |
| RSI (Relative Strength Index) | 26.6 |
| EPS (Earnings Per Share) | ₹34.5 |
| No. of Equity Shares | 11.5 Cr. |
| PEG Ratio | 1.39 |
| DMA 200 (200-day Moving Average) | ₹1,530 |
| Free Cash Flow (3 Years) | ₹242 Cr. |
| Free Cash Flow (Latest Year) | ₹-755 Cr. |
Investment Outlook & Final Thoughts
GRSE presents a compelling case for investors looking to gain exposure to the growing defense sector. With an order book significantly higher than its market cap, strong financials, and a commitment to indigenous production, the company is well-positioned for future growth.
However, investors should also consider factors such as valuations (P/E of 35.5), stock volatility, and macroeconomic conditions impacting the defense industry. The strong promoter holding (74.5%), low debt-to-equity ratio (0.01), and high ROE (22.2%) further strengthen its investment appeal.
With India’s defense modernization and Make in India initiatives, GRSE is expected to continue its growth trajectory, making it an interesting stock to watch in 2025.
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like ET, NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.