Garden Reach Shipbuilders: A PSU Defence Stock Trading at Over 50% Discount with ₹24,000 Cr Order Book
Garden Reach :India’s defence sector is witnessing a historic boom, fueled by rising security needs, indigenous manufacturing initiatives, and record-high government allocations. A key player in this space, Garden Reach Shipbuilders & Engineers Ltd (GRSE), has secured a massive ₹23,877 crore order book, making it a stock to watch. However, despite strong fundamentals, the stock is currently trading at a 56% discount from its all-time high, presenting a potential investment opportunity.
Let’s dive deep into GRSE’s financials, growth prospects, and market outlook.
GRSE’s Price Movement: A Steep Decline from Highs
GRSE, a leading PSU shipbuilder, has seen significant stock price fluctuations over the past year.
- Current Price: ₹1,303.10 per share
- Market Capitalization: ₹14,982.26 crore
- 52-Week/All-Time High: ₹2,834.60 (July 2024)
- Correction from Peak: -56%
This sharp decline is largely attributed to a broader correction in defence stocks and uncertainties surrounding India’s ₹50,000 crore ($6 billion) submarine project, which faced delays and contract-related concerns. However, the company’s fundamentals remain strong, and experts believe its growth trajectory remains intact.
Massive ₹24,000 Cr Order Book: What’s in Store?
GRSE has a robust order book of ₹23,877 crore, covering 40 platforms across 10 major projects. Key contracts include:
- 17 Warships for the Indian Navy
- Oceanographic Research Vessel & Acoustic Research Vessel
- 6 Multi-Purpose Vessels for a German client (export orders)
- 13 Hybrid Ferries for West Bengal (World Bank-funded project)
These projects reinforce GRSE’s standing as a key player in India’s naval defence industry.
Project Execution & Upcoming Milestones
The company has successfully executed multiple large-scale projects, with ongoing developments showing steady progress:
✅ P-17 Alpha Project: First ship set for early delivery by August 2025
✅ Survey Vessel Large: Two ships already delivered; two more by mid-2025
✅ ASW Shallow Water Craft & Offshore Patrol Vessels: On schedule
This on-time execution of large defence projects underscores GRSE’s operational efficiency and reliability.
Government Support & Growth Forecast
The Indian government’s aggressive push for domestic defence manufacturing further strengthens GRSE’s outlook:
💰 Defence Budget (2025-26): ₹6.81 lakh crore
💰 Capital Acquisition Allocation: ₹1.80 lakh crore
💰 Domestic Production Value: ₹1.27 lakh crore
Additionally, the ₹25,000 crore Maritime Development Fund is set to boost shipbuilding infrastructure, aligning with GRSE’s expansion goals.
The company’s management projects a CAGR of 20%-25% over the next five years, with high-value tenders (Corvette and P-17 Bravo projects) expected to bolster future earnings.
Export Potential: Tapping Global Markets
GRSE is ramping up its global footprint, with exports currently comprising 4% of its total order book. The company aims to quadruple its export revenues within the next four years, leveraging government initiatives supporting indigenous shipbuilding for international markets.
GRSE Financials & Key Ratios
Here’s a look at GRSE’s financial health and valuation metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹14,851 Cr. |
| Current Price | ₹1,297 |
| 52-Week High / Low | ₹2,835 / ₹673 |
| Stock P/E | 37.6 |
| Book Value | ₹161 |
| Dividend Yield | 0.72% |
| ROCE (Return on Capital Employed) | 27.4% |
| ROE (Return on Equity) | 22.2% |
| Face Value | ₹10.0 |
| Promoter Holding | 74.5% |
| Price to Book Value | 8.07 |
| Debt to Equity | 0.01 |
| Pledged Percentage | 0.00% |
| Industry PE | 41.2 |
| Graham Number | ₹353 |
| Intrinsic Value | ₹963 |
| RSI (Relative Strength Index) | 42.0 |
| EPS (Earnings Per Share) | ₹34.5 |
| No. of Shares | 11.5 Cr. |
| PEG Ratio | 1.48 |
| DMA 200 (200-Day Moving Average) | ₹1,506 |
| Free Cash Flow (3Yrs) | ₹242 Cr. |
| Free Cash Flow (5Yrs) | ₹1,154 Cr. |
| Debt | ₹9.59 Cr. |
| Return on Assets | 3.26% |
Why GRSE Could Be a Strong Long-Term Bet
Despite the stock price correction, GRSE remains fundamentally strong, with a growing order book, strong execution, and a positive long-term outlook. Key reasons to keep an eye on this defence PSU stock:
✅ Backed by Government Policies: India’s push for indigenous defence production
✅ Strong Order Book: ₹23,877 crore worth of projects
✅ Debt-Free & Profitable: Debt-to-equity ratio of just 0.01
✅ Attractive Valuation: Trading 56% below its all-time high
✅ Export Growth Potential: Plans to quadruple exports in 4 years
Given the company’s healthy financials and government backing, GRSE could be an attractive investment for long-term investors, especially if India’s defence sector continues its upward trajectory.
Final Thoughts: Should You Invest?
With a massive ₹24,000 crore order book, a strong execution pipeline, and government-backed growth initiatives, Garden Reach Shipbuilders appears undervalued at its current price levels. While short-term volatility in defence stocks persists, the long-term fundamentals remain intact.
For investors looking at defence sector growth stories, GRSE is a PSU stock to keep an eye on. However, as with any investment, conducting personal research and consulting financial advisors is always advisable.
Would you consider adding GRSE to your portfolio? Let us know in the comments!
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.