Garden Reach is an A /T+1 group Aerospace & Defense company with having Face value of Rs. 10. It is a premier shipbuilding company in India under the administrative control of the Ministry of Defence, primarily catering to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard. In addition to the shipbuilding, it also builds and supplies various boats, pontoons, barge, sailing dinghy, fishing trawler, fire float, tug, dredger, passenger ferry, motor cutter, deck whaler and launch. The engineering division of the Company makes portable bridges, deck machinery items and marine pumps and Engine division assemble, test and overhauls of marine engines. It has also signed a license agreement with MTU Germany for semi knocked down assembly of MTU 12V/ 16V 4000M90 engines and the production of certain engine parts.  Presently, the company has three (3) separate facilities for shipbuilding, all of which are located in close vicinity of each other at Kolkata, India. The Company builds ships at the Main Works Unit and the Rajabagan Dockyard and Third facility, the FOJ Unit is primarily used for fitting out and repair of ships. The company built the indigenous warship of the country INS Ajay, which was the first Naval ship built in the country after India's independence.  It is the first and the only Indian shipyard to build and subsequently deliver a fleet tanker to the Indian Navy and to build and subsequently deliver a hovercraft to the Indian Coast Guard among others. In past the company had also signed the contract for building CGS Barracuda, a multi-role offshore patrol vessel for National Coast Guard of Mauritius in 2011 for export of a warship.  The co. has a proven capacity to build the 20 warships concurrently which includes 8 large warships and 12 small or medium‐sized warships. They also have a Proven capability of producing a wide spectrum of ships ranging from 5 Ton Boats to 24,600 Ton fleet tankers. The company is committed to Atmanirbharta within the Make-in-India initiative through its delivery of 108 warships along with an order book of approximately 24,500 crores and 19 warships currently under construction. As on 31 Mar 2023 the company’s order book stood at 25,111.29 crore, reflecting a significant increase primarily driven by the `3,550 crore contract for construction of four Next-Generation Offshore Patrol Vessels for the Indian Navy.

Fundamentals (FY22-23):

Financial Results:

Company’s Net Sales was Rs 755.90 crore in June 2023 up 30.38%, Quarterly Net Profit at Rs. 76.68 crore in June 2023 up 52.82% and EBITDA stands at Rs. 116.70 crore in June 2023 up 57% as compared to June 2022. Company’s EPS has increased to Rs. 6.69 in June 2023 from Rs. 4.38 in June 2022.

Key Points:

1. The company has entered a deal with DEMPO Group to launch a collaboration model to build commercial vessels in three premier shipyards at Goa and Bhavnagar. It is GRSE’s maiden attempt to diversify in a big way in commercial shipbuilding to capture a large market share in construction of commercial vessels, both domestic as well as international.
2. Recently the company launched an autonomous underwater vehicle (AUV), It is lightweight and man-portable one developed by the company in collaboration with Aerospace Engineering Private Ltd. (AEPL) as an industry partner. It has been designed to operate in a totally autonomous manner and its modular design enables it to carry out a variety of roles depending on the payload. These AUVs once in operation by our Armed Forces, could play an important role in mine countermeasure operations and make excellent reusable targets during Anti-Submarine Warfare (ASW) practices by warships. They can also be deployed for passive acoustic monitoring during which they could remain in position for prolonged durations, monitoring the possible movement of sub-surface platforms.
3. Recenlty, President of India Smt. Droupadi Murmu launched INS Vindhyagiri the last in the series of three P17 Alpha being built for the Navy by GRSE at Kolkata-based shipyard. It was the part of the three Nilgiri Class frigates ordered for approximately Rs 19,200 crore and the largest ever contract being executed by GRSE.
4. GRSE had earlier signed a MoU with M/s Rolls Royce for co-production of high-speed Marine Diesel Engines. The company has also signed Contract for manufacturing & supply of ten 30 mm Naval Surface Guns worth Rs 248.5 Crore for the Ministry of Defence / Indian Navy paving the way towards indigenisation of weapons systems for the Indian Armed Forces.
5. It has signed an MOU with Kongsberg Maritime (KM), Finland for co-production of indigenous Water Jets (WJs) of up to 3.5 MW. Waterjet Propulsion Systems are extensively used onboard by Indian Navy & Indian Coast Guard ships and therefore, this collaborative effort of GRSE & Kongsberg Maritime (KM) has huge market potential in the coming years.
6. Garden Reach Shipbuilders and Engineers (GRSE) Ltd set a new standard in shipbuilding by launching two warships of different classes together on 13 Jun 23 which includes INS Anjadip, the 3rd Anti-Submarine Shallow Water Craft (ASW SWC) and INS Sanshodhak, the 4th Survey Vessel Large (SVL) and the Keel for the 7th ASWSWC being built by GRSE was also laid on the same day showcasing the on time delivery capabilities of the company.
7. Garden Reach Shipbuilders and Engineers Ltd., (GRSE) recently achieved yet another momentous milestone by securing a groundbreaking deal with the Border Roads Organisation (BRO) for the fabrication, supply, erection and launching of additional 30 nos. Double-Lane Class 70 modular steel bridges in border areas to enhance connectivity in critical forward areas along India's borders, facilitating seamless troop and equipment deployment.
8. GRSE built Ocean-going Passenger-cum-Cargo Ferry MV 'Ma Lisha' for the Cooperative Republic of Guyana which was delivered and commissioned at Georgetown, Guyana.
9. The company has also delivered a Fast Patrol Vessel, SCG PS Zoroaster to Seychelles Coast Guard.
10. Company has also entered into a contract with Indian Navy for indigenous development and supply of 10 in number 30 mm Naval Surface Gun (NSG) with Electro Optical Fire Control System (EOFCS) at a cost of 248.51 crore in May 2023.

In last 3 Years the stock has given a whooping return of 316.09% as compared to the rise of Sensex and Nifty in the same period.

The company has shown focus on expanding its exports as it continues to be a thrust area of the co., with focus on Europe, SAARC, ASEAN, African and Latin American countries. Along with the launch of AUV the company has also showcased its focus on development of green energy platforms and autonomous platforms in all the three domains of operations - Sub-surface, Surface and Aerial which has a huge market size ahead in upcoming years. The company’s foray into the field of weapons and sensors marks a significant diversification with immense future potential. For FY23 company has an order book of ` 24,147 crore, with seven projects, comprising of 24 vessels. It has been maintaining a healthy dividend payout of 34.5% and company’s financial performance has beaten its sector’s overall performance. Considering Indian Defence ministry’s momentum of transformation for indigenously developing products in India and for global markets, good financial performance over the years, strong order book position and focus on product diversification through introduction of new age products, the company is well poised to have a place in your portfolio for long term period.

 - HET ZAVERI

- info@smartinvestment.in

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