In the rapidly growing defense and shipbuilding space, one stock that has captured investor attention is Garden Reach Shipbuilders & Engineers Ltd (GRSE). While other players like Mazagon Dock and Cochin Shipyard have also seen sharp moves, GRSE has delivered an exceptional return — doubling in value within the first five months of 2025.
This Kolkata-based public sector undertaking has emerged as one of the most outstanding performers of the year. The stock has surged nearly 100% in just about five months, driven by a combination of strong fundamentals, a robust order book, and strategic collaborations.
Strong Q4 FY24 Performance Adds to the Optimism
Recently, GRSE posted its Q4 FY25 results, which further reinforced investor confidence. The company reported a 62% year-on-year rise in revenue, reaching Rs 1,642 crore. Net profit more than doubled to Rs 244 crore during the quarter. Operating margins also showed significant strength, growing by 63% and reaching 12.85%. This strong financial performance was driven mainly by its core shipbuilding division.
Shipbuilding Segment: The Backbone of GRSE
Accounting for nearly 89% of the company’s revenue, the shipbuilding segment is GRSE’s mainstay. The division focuses on building advanced vessels for clients in the defense and shipping industries. This includes frigates, missile corvettes, anti-submarine warfare corvettes, survey vessels, and offshore patrol vessels.
A majority of GRSE's customers are central and state government entities, particularly the Indian Navy and the Indian Coast Guard. Over the years, the company has also supplied a wide range of marine and support vessels such as boats, pontoons, barges, fire floats, tugs, dredgers, passenger ferries, and more to various customers.
GRSE operates three shipbuilding facilities located close to each other in Kolkata — the Main Works Unit and the Rajabagan Dockyard are its primary ship construction sites.
Engineering and Diesel Engine Segments
Though significantly smaller in contribution, GRSE also operates in engineering and diesel engine verticals.
The engineering division, which contributes less than 1% of revenue, produces portable steel bridges, deck machinery items, and marine pumps. It was established to indigenize high-tech marine components. This division operates out of two facilities in Kolkata — the 61 Park Unit (for portable bridges) and the Taratala Unit (for deck machinery).
The diesel engine segment contributes around 3% of the total revenue. The company’s diesel engine plant in Ranchi handles testing and overhauling of marine propulsion engines, and the assembly of semi-knocked down diesel engine units. GRSE operates under a license agreement with MTU Germany for the assembly of MTU 12V/16V 4000M90 engines and production of some engine parts.
Proven Manufacturing Strength and Capacity
GRSE has a demonstrated capacity to build 20 warships concurrently, which includes 8 large warships and 12 small to medium-sized warships. It is capable of producing a broad range of vessels, from 5-ton boats to 24,600-ton fleet tankers. This diversified shipbuilding capability gives the company a significant edge in meeting complex and varied requirements of the Indian defense sector.
Modernization and Capacity Planning
While the company is not looking to expand capacity in the near term, it is actively modernizing and refurbishing its existing infrastructure. This is aimed at enhancing operational efficiency and supporting the concurrent construction of up to 20 warships.
Robust Order Book: Anchored by Indian Navy Projects
As of Q4 FY25, GRSE’s order book stood at Rs 23,592 crore. The majority of these orders are from the shipbuilding segment, with limited contributions from ship repair, portable steel bridges, and other verticals.
The order book comprises four major projects for the Indian Navy:
Three ships under the P17 Alpha Project
Four ships under the Survey Vessel Large Project
Eight ships under the Anti-Submarine Shallow Water Crafts Project
Four ships under the Next Generation Ocean Going Patrol Vessel Project
These large-scale, multi-year projects provide solid revenue visibility and ensure long-term business sustainability.
MoU with Norwegian Firm for India’s First Polar Research Vessel
A key catalyst for the recent stock surge was GRSE's signing of a Memorandum of Understanding with a Norwegian company to build India’s first indigenous Polar Research Vessel. These ships function as floating laboratories for research in deep-sea and Arctic regions. Capable of navigating extreme weather and ice-covered waters, they are critical assets for environmental and oceanographic research.
This vessel will be entirely manufactured in Kolkata, underscoring GRSE’s rising technological prowess. With countries like the US and Russia already possessing such vessels, India’s entry into this field marks a major milestone in the nation’s scientific and naval capability.
GRSE’s phenomenal rise in 2025 is backed by strong fundamentals, a healthy order book, and exciting developments in both domestic defense manufacturing and global collaboration. Its strategic role in building complex vessels and a rapidly expanding product portfolio further strengthens its growth outlook. However, given the sharp rally, partial profit booking is worth considering, while keeping an eye on its long-term potential.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors are advised to do their own research or consult a qualified financial advisor before making any investment decisions.
