Garden Reach Shipbuilders & Engineers Limited

Industrials — Aerospace & Defense · NSE

₹2,126.60+₹24.20 (+1.15%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by moderate debt load, negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

The 60-second version of Garden Reach Shipbuilders & Engineers Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Garden Reach Shipbuilders & Engineers Limited engages in the design and construction of war ships in India.

IndustryAerospace & Defense

SectorIndustrials

Employees1,463

Annual revenue₹6,995 Cr

How does it make money?

Turns over ₹6,995 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation. Each of its 1,463 employees supports ₹4.78 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.78 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 36.8%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 28.5% against a peer median of 15.2% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE15.2%

What is the outlook?

6 analysts covering the stock expect revenue to grow about 7.6% and earnings to grow about 17.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+7.6%

Est. earnings growth+17.4%

Analysts6

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +175% while net margin moved +19% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+175%

Margin effect+19%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.69 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

78/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

71/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

30.4x

3Y Median

53.1x

40 monthly readings · mean 56.0x · range 32.5x–120.8x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 43% below its 3y median of 53.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 66% below the peer median of 88.8x.

vs. its own history

Cheap

53.1x median over 40 months · -43%

vs. sector peers

Cheap

88.8x median of 3 peers · -66%

vs. generic bands

Fair

15x–35x

EV/EBITDA

22.9x

PEG

0.63

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 13.3% to 15.2% over 3 years.
Debt is being paid down
Total debt is down 88% over 3 years.
Return on equity is rising
ROE has improved from 16.1% to 28.5%.
Return on capital is rising
ROCE has improved from 20.3% to 36.8%.
High return on capital employed
ROCE of 36.8% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 3 high

🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Receivables growing faster than salesFinancial
Receivables up 2301% against revenue up 175% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 36.8% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 13.3% to 15.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 88% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 43% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 66% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 2301% against revenue up 175%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 30% a year✓ 40.0% CAGR
Latest reported year was 38.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 13%✓ 15.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹367 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 34%✓ 36.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 4 neutral · 2 weak

Market Cap

₹24,361 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

30.4x

Fair

Fairly valued against the generic band

P/B Ratio

9.28x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹69.9

Profitable

Profitable on a per-share basis

ROE

28.5%

Strong

Strong capital efficiency

ROCE

36.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.42x

Moderate

Moderate leverage

Revenue Growth (YoY)

38.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

43.9%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.92%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹367 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

23.9x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

7.5%

Average

Average margins

Net Margin

10.7%

Good

Strong bottom-line conversion

Current Ratio

1.23

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.69

Defensive

Steadier than the market

52W Range Position

12%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

2198.4 / 2408.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

31.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,548 Cr	₹3,588 Cr	₹5,071 Cr	₹6,995 Cr	+40.0%
EBITDA	₹340 Cr	₹518 Cr	₹744 Cr	₹1,066 Cr	+46.4%
EBITDA Margin	13.3%	14.4%	14.7%	15.2%	—
PAT (Net Profit)	₹228 Cr	₹357 Cr	₹527 Cr	₹748 Cr	+48.6%
EPS	₹19.91	₹31.19	₹46.04	₹65.29	+48.6%
ROE	16.1%	21.3%	25.4%	28.5%	—
ROCE	20.3%	27.4%	32.4%	36.8%	—
Total Debt	₹312 Cr	₹66 Cr	₹10 Cr	₹37 Cr	-50.7%
Free Cash Flow	₹1,408 Cr	-₹755 Cr	-₹51 Cr	-₹367 Cr	—

🟢 Revenue has grown at 40.0% a year over 3 years.

🟢 EBITDA has grown at 46.4% a year over 3 years.

🟢 EBITDA Margin has risen from 13.3% to 15.2% over 3 years (+1.9 pts).

🟢 PAT (Net Profit) has grown at 48.6% a year over 3 years.

🟢 EPS has grown at 48.6% a year over 3 years.

🟢 ROE has risen from 16.1% to 28.5% over 3 years (+12.3 pts).

🟢 ROCE has risen from 20.3% to 36.8% over 3 years (+16.5 pts).

🟢 Total Debt has shrunk at 50.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1,408 Cr to -₹367 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹10,636 Cr

Total Liabilities

₹8,010 Cr

Cash & Equivalents

₹17 Cr

Operating Cash Flow

-₹290 Cr

Capex

-₹77 Cr

Shareholding (proxy)

Institutional Holding

3.9%

Insider Holding

74.5%

Corporate Actions

Dividend Rate

₹19.6

Ex-Dividend Date

18 Sept 2026

Analyst Consensus

Recommendations

4 Buy · 3 Hold · 0 Sell

Target Price (Mean)

₹3,069.29

+44.3% vs CMP

Target Range

₹2,660 – ₹3,500

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

3 mixed3 general

GRSE Share Price Falls 2.49%: Price, Valuation

Univest, 28 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

The Warship Order Timeline Explained: What the Vessel Delivery Milestones Test Really Reveals

Kalkine India, 16 Oct

We Ran A Stock Scan For Earnings Growth And Garden Reach Shipbuilders & Engineers (NSE:GRSE) Passed With Ease

Simply Wall Street, 02 SeptResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Garden Reach shares rise 5% on Navratna status; here's what analysts say

Business Standard, 22 JunPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Better Defence Stock: GRSE vs Data Patterns

Equitymaster, 27 Sept

Stocks In Focus: Why Are Garden Reach Shipbuilders, Mazagon Dock And Cochin Shipyard Shares Surging?

NDTV Profit, 06 Aug

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability

MiddlingFinancial Health · Valuation · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 3 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑