Garden Reach Shipbuilders Shares Surge 18% After Profit Jumps In Q1

Shares of Garden Reach Shipbuilders and Engineers Ltd. surged over 18% to hit a record high on Wednesday after its profit jumped 53% in the first quarter.

The company's net profit rose 53% year-on-year to Rs 76.7 crore in the quarter ended June, according to an exchange filing.

"Our Q1 results have been very, very encouraging," Commodore (Retired) PR Hari, chairperson at Garden Reach Shipbuilders, told BQ Prime's Sajeet Manghat in an interview. "It's the best in the history of the company, with our revenue from operations moving up by 30% year-on-year."

The order book position of the shipyard as of June 30 stood at Rs 24,546 crore, he said. GRSE expects to complete the order book by 2027. It comprises four projects for the Indian Navy, consisting of 19 warships, three P17 alpha advanced frigates, eight anti-submarine shallow watercraft, and four large survey vessels.

The company expects the shipbuilding industry to get contracts worth Rs 1.2 lakh crore over the next two to four years, even as India's push for localisation is already driving order inflow.

GRSE Q1 FY24 Highlights (Consolidated, Year-on-Year)

• Revenue up 30% at Rs 755.9 crore.

• Ebitda up 38% at Rs 46.1 crore.

• Margin at 6.09% versus 5.77%.

• Net profit up 53% at Rs 76.7 crore.

Shares of Garden Reach Shipbuilders jumped 18.78% before paring gains to trade 17.47% higher at 10:50 a.m., compared to a 0.17% decline in the NSE Nifty 50.

The stock hit a record high price of Rs 781 apiece. It has risen 59.3% year-to-date. Total traded volume stood at 13.7 times its 30-day average. The relative strength index was at 81, implying that the stock may be overbought.

Of the five analysts tracking the company, three maintain a 'buy' rating, one recommends a 'hold', and one suggests a 'sell' on the stock, according to Bloomberg data. The average 12-month price target given by analysts implies a potential downside of 30.2%.