Benzinga - Shares of Garden Reach Shipbuilders (NS:GRSE) have had a strong bull run at the bourses, going up over 130% since the start of the year. However, analysts at ICICI Securities (NS:ICCI) expect the run to halt going forward.
The Garden Reach Analysts: Amit Dixit-led analyst team at ICICI Securities maintained the “sell” rating for the stock with a target price of ₹515, reflecting a downside of around 73% from the stock’s current levels of over ₹1,950.
The Garden Reach Thesis: The brokerage said that Garden Reach Shipbuilders reported an EBITDA of ₹56.3 crore, reflecting a 22.1% year-on-year growth. However, it noted that the EBITDA margin declined to 5.6% due to lower gross margins.
The analysts also highlighted that the company's key ship projects are now in their peak revenue phase, with revenue expected to reach its highest point in FY26.
The brokerage added that the company secured orders worth over ₹1,500 crore since the start of the financial year, including an export order of $82.6 million (around ₹685.5 crore). The company's order pipeline remains strong, with potential contracts on the horizon, the analysts added in the review note on the defence major after the Q1 results.
Additionally, GRSE is exploring export opportunities from Bangladesh, Sri Lanka, and Guyana, the analysts added.
Looking ahead, despite securing major orders, the analysts think that the shipbuilder's growth prospects will depend on upcoming contracts.
The timing and extent of the company's involvement in these contracts remain uncertain, with potential delays from the Indian Navy. The company’s earnings per share is expected to remain constrained between ₹55-65, with margins likely to stay under pressure due to competitive bidding with a steady margin of 6-7%, the brokerage said.
The analysts said that the cautious view is fair given the considerable uncertainties around future orders and the current order book peaking out in FY26.
Price Action: GRSE’s share price was down 0.65% at ₹1,938.60 as the markets opened on Wednesday.
Read Next: Nykaa (NS:FSNE)'s Profit Jumps Nearly 200% To ₹9.6 Cr, But Misses Street Expectations
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.