Garden Reach shares: Multibagger PSU defence stock GRSE down 38% from July high; Buy, says Antique

Garden Reach Shipbuilders & Engineers Ltd (GRSE), which has been in a bear grip of late, received a ‘Buy’ rating from Antique Stock Broking, as the brokerage believes the shipbuilding firm has strong order book position and its execution on prevailing orders could lead to steady topline growth.

Antique Stock Broking met the senior management of Garden Reach Shipbuilders to understand its strategic priorities and noted that the defence company has extensive product range that spans warships to weapons, including naval warships and commercial ships, various deck machinery, marine diesel engines, naval surface guns, and Bailey-type portal steel bridges.

“GRSE has the capability to construct 20 ships concurrently (four large ships and five small ships in prelaunch phase and four large ships, seven small ships in the post-launch phase),” it noted.

The Garden Reach order book stood at Rs 25,230 crore with major projects on track to be executed in the next 2-3 years, Antique Stock Broking said.

GRSE is anticipating tenders for five next-generation survey vessels, two multi-purpose vessels, 21 water jet fast attack crafts, six NOPVs, 22 IBs, and 120 fast interceptor crafts in the coming years.

“On the non-defence front, the focus is on ship building and green energy platforms such as electric ferries, green tugs, which offer decent opportunities for growth. We maintain BUY rating with a target price of Rs 2,092 at a target 1HFY27 P/E multiple of 45 times,” Antique said.

GRSE shares are down 38 per cent from their July high of Rs 2,834.60 level. Despite this, the multibagger stock is up 100 per cent in 2024 so far and 1,046 per cent in the past five years.

As per the current timelines, a majority of the orders should be executed by FY26 and FY27, the brokerage said adding that the next generation corvettes might aid the order book further.Among GRSE’s orders, the order for P17 alpha ships was signed on February 20, 2015 with a total order value of Rs 21,830 crore. Out of this, Rs 7,580 crore has been executed till Q1FY25. The 1st ship is 72 per cent complete and is expected to be delivered by August 2025. The 2nd ship is 60 per cent and should be delivered by April 2026. The 3rd ship is 48 per cent complete) and should be delivered by August 2026.