Sell Garden Reach Shipbuilders; target of Rs 515: ICICI Securities

ICICI Securities research report on Garden Reach Shipbuilders

We attended the Q1FY25 concall of Garden Reach Shipbuilders (GRSE). Key points: i) Orderbook at end-Q1FY25 was INR 252.3bn, ii) four major contracts worth INR 15-16bn (exports INR 7bn) were executed in Q1, iii) RFPs of projects worth INR 85-90bn are likely within a year and there is a healthy prospective pipeline of >INR 1,300bn beyond that, iv) current orderbook may be executed by FY27, v) RFP of next gen corvette (NGC) is out, and management expects L1 to be declared in next four months.

Outlook

Going ahead, management has guided for revenue growth of 25-30% for FY25-26 while maintaining its PAT margins at 7.5-8%. Despite our estimates being at the higher end of the management’s guidance, we believe returns are capped. Maintain SELL with DCF-based TP of INR 515.