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      shipbuilders stock ICICI stock price GRSE ICICI stock Stock price grse share price

      Garden Reach Shipbuilders stock price: ICICI Securities projects a 72% decline following a 122% increase in the previous year.

      Despite a 122% increase, ICICI Securities still recommends selling Garden Reach Shipbuilders. It mentions pressure from competition on margins and expected delays in order execution from Bangladesh.

      shipbuilders stock ICICI stock price GRSE ICICI stock Stock price grse share price

      Garden Reach Shipbuilders (GRSE), a multibagger defense stock, is nevertheless rated as a “sell” by domestic brokerage house ICICI Securities, despite an impressive 122 percent increase in value over the last year. With a target price of ₹515, the brokerage was forecasting a probable loss of about 72 percent.

      A major consideration in ICICI Securities’ decision was the expectation of delays in order execution from Bangladesh as a result of ongoing geopolitical concerns. Additionally, the company projected that GRSE’s earnings per share (EPS) would be in the range of ₹55 to ₹65 through FY32.

      GRSE’s significant order intake, which included contracts worth over ₹1,500 crore in YTD FY25 and being certified L-1 for a ₹500 crore research vessel project for the DRDO, was noted by ICICI Securities. Though GRSE has bright future development prospects with possible orders for NGC and P-17B frigates, the brokerage advises caution, pointing out that the timing and magnitude of these chances are critical. The concern is increased by recent delays in significant orders for the Indian Navy.

      The brokerage further stated that EPS is expected to be limited to ₹55–65 even in the best-case scenario, which would involve GRSE obtaining the NGC and P-17B frigate orders among other orders. Although margins are anticipated to be under pressure from competitive bidding for these projects,The brokerage further stated that EPS is expected to be limited to ₹55–65 even in the best-case scenario, which would involve GRSE obtaining the NGC and P-17B frigate orders among other orders. Although margins are predicted to remain stable at 6 to 7 percent, competitive bidding for these orders is expected to put pressure on margins.

      The brokerage stated, “Given the significant uncertainties surrounding future orders and the current order book peaking out in FY26E, we believe that our TP implies a P/E ratio of 10x on FY26E EPS is fair.”

      Q1FY25, the June quarter, earnings

      Due in large part to a peak revenue booking phase for its current order book for FY25–26, the defense company’s revenue for Q1FY25 increased by 33.6 percent year over year. The PBT margin dropped to 11.4 percent from 13.5 percent in Q1FY24 due to a dip in gross margins, while the EBITDA margin increased to 5.6 percent from 6.1 percent in Q1FY24 and 8.9 percent in Q4FY24 despite the revenue rise.

      The company’s order book was worth ₹23,100 crore at the end of Q1FY25. Over ₹1,500 crore in orders have been placed with GRSE thus far in FY25, including a $82.6 million export order from businesses in Germany and Bangladesh. In addition, from 14.9 percent in Q1FY24 to 13 percent in Q1FY25, subcontracting expenses as a percentage of sales decreased.

      Large Contracts

      Garden Reach Shipbuilders (GRSE) won four major contracts in FY25 YTD. Among these is the building and 42-month delivery schedule for an ocean research vessel worth at ₹840 crore for the National Centre for Polar and Ocean Research (NCPOR). Additionally, GRSE is developing an advanced dredger for the Government of Bangladesh, valued at $16.6 million, and an advanced ocean-going tug for the Ministry of Defence, Bangladesh, valued at $21 million.

      Furthermore, the company is building four multipurpose vessels for Carsten Rehder Schiffsmakler and Reederei GmbH & Co KG in Germany. The project is estimated to be worth $45 million, and the delivery date is set for 33 months. A contract of ₹500 crore has also been awarded to GRSE for the construction of a research vessel for the DRDO, while negotiations are still ongoing. Nonetheless, there can be delays in carrying out the Bangladeshi government’s directives given the current state of affairs in that country.

      Trend of Stock Prices

      Despite some volatility in 2024, the price of GRSE’s stock has produced multibagger profits, rising 108 percent so far this year. Despite three of the last eight months having negative returns, the rally continues. After rising for four straight months—29.3 percent in April, 38.5 percent in May, 53.3 percent in June, and 14.6 percent in July—it fell by over 25 percent in August. On the other hand, the stock underwent corrections, falling 12.5 percent in February and rising 6 percent in March, but up 6.6% in January.

      The stock is currently trading at ₹1,813.90, somewhat below its peak of ₹2,834.60, which it reached last month. But since October 2023, when it reached a 52-week low of ₹648.05, it has increased by more than 180 percent.

      Despite GRSE’s outstanding stock performance and large contract wins, ICICI Securities is still wary of potential delays and margin-pressure from competitors. The brokerage’s target price takes into account the order book peak anticipated in FY26E as well as the uncertainties surrounding upcoming orders. When considering their positions in GRSE, investors should balance the stock’s recent gains against the anticipated difficulties and changing market conditions.

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