Garden Reach Shipyard and Engineers

Garden Reach Shipyard: This Kolkata-based shipbuilding powerhouse has left an indelible mark on the Indian shipbuilding industry since its founding in 1884. Garden Reach Shipbuilders & Engineers Ltd. (GRSE) is more than just a company, it is a century-old legacy and a significant contributor to the nation’s shipbuilding capabilities.

With over 100 years of history, GRSE has successfully navigated the ever-changing trends of the shipbuilding industry. The company was listed on October 10, 2018, and its stock has performed exceptionally well since then, recording a whopping return of 837.67% in five years.

Learn more about GRSE’s business, view its order book and take a closer look at the prospects that have brought it to the forefront of Indian shipbuilding.

business overview

Garden Reach Shipbuilders & Engineers Ltd. (GRSE) dates back to 1884, starting as a ship repair workshop. GRSE, acquired by the Indian government in 1960, developed into a leading warship building company.

GRSE’s journey includes important milestones such as the construction of India’s first naval warship in 1961, followed by global projects such as the export warship “CGS Barracuda”. The shipyard has established itself as a leader in Indian shipbuilding by delivering over 785 platforms, including a notable 108 warships.

Apart from shipbuilding, GRSE is also involved in engine production and engineering and has received awards such as the Raksha Mantri Award 2022 for designing quiet ships for anti-submarine warfare for the Indian Navy. Let’s take a closer look at the GRSE sector and its contribution to the company’s earnings.

Sector: Diversification for Growth

The Company’s revenue distribution is diverse across segments, reflecting its strong and diverse business portfolio. In the contract revenue segment, shipbuilding emerged as a significant contributor accounting for a significant portion of the total revenue at Rs 2,301.97 crore.

Ship repair and general engineering components within contract revenue also make notable contributions, further increasing the overall revenue stream. Another important segment is product sales, which generates revenue of Rs 175.98 crore.

Within this category, B&D Spares and Bailey Bridge show significant numbers, indicating high market demand for these products. Additionally, the services sales segment with total revenue of Rs 45.87 crore is led by ship repair services, followed by Bailey Bridge and diesel engine services.

Below is a chart showing the revenue contribution of these various segments.

Source: Annual Report

According to the company’s annual report, it earns 91% of its revenue from its contracts segment, with product and service sales accounting for about 7% and 2%, respectively.

This diversified revenue structure demonstrates the company’s ability to excel in both selling products and providing services, and highlights its resilience and adaptability to a variety of market segments. The company operates through three divisions: Marine Division, Engineering Division, and Engine Division. Let’s take a look at the company’s order book across three segments:

GRSE Order Form

Source: Annual Report

The company relies heavily on the shipping segment for order flow, from which the majority of its orders come.

The engineering segment, which contributes substantially to the company’s value of production (VoP), achieved USD 69.82 billion during the financial year 2022-23. On the other hand, the Engine division achieved 229.7 billion VoP during the same period. The marine division, a key driver, recorded an impressive VoP of Rs 2,454.89 crore, highlighting its pivotal role in the company’s overall production and revenue generation.

This distribution highlights the strategic importance of the shipping segment and highlights its substantial contribution to the company’s operating and financial performance.

financial environment

GRCE delivered outstanding financial performance in the 2022-23 financial year, demonstrating significant growth across key metrics. Revenue from operations increased significantly by 45.7% from Rs 154.1 billion in FY22 to Rs 256.1 billion in FY23.

Accordingly, total revenue also increased significantly from 191.8 billion rupees to 276.3 billion rupees. The company achieved 19% YoY growth in EBITDA, with the figure increasing from Rs 294.88 crore to Rs 351 crore. Notably, net profit (PAT) surged from Rs 189.53 crore to Rs 228 crore, a solid 20% YoY increase.

The positive trajectory extended to the company’s earnings per share (EPS), up 20%, from 16.55 to 19.91. Reflecting positive investor sentiment, the price-to-earnings ratio (P/E) rose significantly from 13.68 to 22.88. This upward trend indicates favorable perception among investors.

Additionally, GRCE’s net assets increased by 12.5% ​​year-on-year, reaching Rs 1,413 crore from Rs 1,257 crore. These financial indicators collectively highlight GRCE’s strong performance, financial strength, and the confidence it instills in investors.

future prospects

Garden Reach Shipbuilders & Engineers Ltd. (GRSE) looks forward to a promising future with the launch of its Next Generation Offshore Patrol Vessel (NGOPV) and delivery of naval projects. GRSE, which expects to execute a significant portion of its order book over the next three years and capitalize on growth in autonomous defense vehicles and green energy ships, could succeed.

The company also sees opportunities in the commercial shipbuilding sector and identifies marine ferries, tugs, dredgers, barges and E-Ferries as target products for domestic and global markets. The robust order book comprising 19 warships currently in progress for the Indian Navy is in line with government initiatives to promote self-reliance in defence.

GRSE’s strategic move into the commercial shipbuilding sector and its plans to meet domestic and global demand demonstrate its forward-thinking approach. The positive outlook is further strengthened by the encouraging environment in the defense shipbuilding sector, driven by ambitious acquisition plans and government initiatives such as Make in India and export promotion.

India’s shipbuilding industry is expected to grow significantly due to the ambitious plans of the Indian Navy and Coast Guard. The two services aim to have a fleet of 200 ships each, and their integrated shipbuilding program over the next 14-15 years proposes to order more than 150 warships over the next few years. This strategic move reflects a significant increase in industry orders and highlights the country’s commitment to strengthening its maritime capabilities.

conclusion

In conclusion, Garden Reach Shipbuilders & Engineers Ltd. is a stalwart of India’s shipbuilding heritage with a rich history dating back to 1884. Over the years, the company has not only weathered the storms of industrial development but has also emerged as a beacon of excellence. . Strategic diversification across shipbuilding, engineering and engine sectors combined with a flexible revenue model reflects the company’s adaptability.

The financial performance of FY22-23 presents a compelling picture of GRSE’s success with significant growth in revenue, EBITDA, net profit and other key financial metrics. The positive outlook is further strengthened by promising orders focused on exploring opportunities in the defense and commercial shipbuilding sectors.

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Written by Akshita Malu

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