Garden Reach Shipbuilders Q1 Review - Inline; Order Execution Is Likely To Peak Out In FY26E: ICICI Securities

ICICI Securities Report

Garden Reach Shipbuilders and Engineers Ltd. Q1 FY25 revenue rose 33.6% YoY as it is going through peak revenue booking phase (FY25–26) of its existing order book. Key points:

1. Ebitda margin dipped to 5.6% (6.1% in Q1 FY24 and 8.9% in Q4 FY24), and PBT margin declined to 11.4% (13.5% in Q1 FY24), mainly due to gross margins slipping.

2. Implied OB, as of Q1 FY25- end, stood at Rs 231 billion.

3. Garden Reach Shipbuilders and Engineers has received orders worth greater then Rs 15 billion (including export order of $ 82.6 million from a Bangladesh and German company) during YTD FY25.

4. Sub-contracting expenses, as % of revenue, declined from 14.9% in Q1 FY24 to 13% in Q1 FY25.

Factoring in big-ticket orders of NGC (5 nos.) and NGD (2 nos.), we estimate earning per share to persist in the range of Rs 55–65/share through to FY32; also we may expect some delays in the execution of orders from Bangladesh due to current geopolitical tensions.

Maintain 'Sell' with a discounted cash flow -based target price of Rs 515.

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