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    Garden Reach Sh.

    GRSE
    Capital Goods·19 Aug 2025
    Management Summary

    Garden Reach Shipbuilders & Engineers Ltd. reported a strong Q1 FY26 with significant project deliveries, including the first P-17 Alpha ship ahead of schedule. The company's order book stands at ₹21,700 crores, bolstered by being the L1 bidder for the next-generation corvette project worth ₹25,000 crores. GRSE is actively pursuing capacity expansion, aiming for 40 ships by 2029, and is focused on new product development in autonomous and green vessel technologies, alongside indigenization efforts.

    Highlights

    5
    • Strong order book of ₹21,700 crores as of June 30, 2025, providing long-term revenue visibility.

    • Successful delivery of key projects ahead of schedule, including the first P-17 Alpha ship (largest weapon platform built by GRSE) on July 31, 2025.

    • Achieved L1 bidder status for the next-generation corvette project, with an estimated value of ₹25,000 crores, expected to be concluded this financial year.

    • Significant progress in capacity expansion, targeting 32 ships by 2026 and 40 ships by 2029, supported by new land acquisition and a greenfield facility.

    • Advancements in new product development, including successful prototype trials for Unmanned Underwater Platforms and an order for Unmanned Surface Vessels, alongside green vessel technology and indigenous bridges.

    What Changed2

    vs Q2 FY26

    Guidance items19 → 25 (+6)Risks discussed0 → 1 (+1)

    Order Book

    high confidence

    Total Value

    ₹ 21,700 crores

    as of 2025-06-30

    quantified

    Execution

    Provides visibility up to 2034 for the next-generation corvette project.

    Composition

    Mix6 segments
    • Defense Shipbuilding86.0%
    • Non-Defense Shipbuilding14.0%
    • Research Vessels (within Non-Defense)9.0%
    • Export (within Non-Defense)5.0%
    • Ship Repair1.0%
    • Bridges & Diesel Engine Plant0.5%

    Share of order book by segment · partial disclosure (115.5% of book)

    Pipeline

    L1 awaiting loa

    L1 bidder for next-generation corvette project, bids submitted for Next-Generation Survey Vessels and Fast Patrol Vessels, RFPs expected for Water Jets FACs, Offshore Patrol Vessels, Intercepted Crafts, and P-17 Bravo project.

    "The order book is healthy, and the company has a clear execution plan with projects moving on fine."

    Source:
    Prepared remarks

    Capital allocation

    5
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    Dry dock from Syama Prasad Mookerjee Port

    acquisition · pending regulatory

    M&A

    Greenfield Shipbuilding Facility land

    acquisition · pending regulatory

    M&A

    Greenfield shipyard (West or East Coast)

    acquisition · pending regulatory

    M&A

    Pipavav Shipyard

    joint venture · announced

    Guidance & targets

    25
    CategoryTargetPriority
    Project Delivery
    P-17 Alpha second ship delivery
    April 2026
    High
    Project Delivery
    P-17 Alpha last ship delivery
    August 2026
    High
    Project Delivery
    Survey Vessel (Large) last ship delivery
    end of this calendar year
    High
    Project Delivery
    Anti-Submarine Shallow Water Craft second ship delivery
    end of this month
    High
    Project Delivery
    Anti-Submarine Shallow Water Craft two more ships delivery
    during the current financial year
    High
    Project Delivery
    Anti-Submarine Shallow Water Craft balance ships delivery
    end of next calendar year (2026)
    High
    Project Delivery
    Next-generation corvette project first ship delivery
    by 2031
    High
    Project Delivery
    Next-generation corvette project last ship delivery
    by 2034
    High
    Project Completion
    Next-Generation Offshore Petrol Vessel project completion
    calendar year 2028 (FY29)
    High
    Order Inflow
    Next-generation corvette project contract conclusion
    during this financial year
    High
    Order Inflow
    Multipurpose Vessels (another four) contract signing
    mid-September (within a month)
    High
    Order Inflow
    Next-Generation Survey Vessels & Fast Patrol Vessels bid declaration
    around the end of this calendar year
    High
    Order Inflow
    RFP for 31 follow-on Next-Generation Water Jets FACs
    towards end of this financial year
    High
    Order Inflow
    Various RFPs (Coast Guard, Navy)
    from now to over a period of next 18 months
    High
    Order Inflow
    P-17 Bravo project RFP
    by the end of this calendar year
    High
    Capacity
    Shipbuilding capacity
    32 ships
    High
    Capacity
    Shipbuilding capacity
    40 ships
    High
    Production
    Greenfield facility production commencement
    within a year
    High
    Acquisition
    Greenfield shipyard acquisition
    within a year
    High
    Revenue Recognition
    P-17 Alpha second ship revenue accrual
    90-92%
    High
    Revenue Recognition
    Next-generation corvette project revenue recognition
    from FY '28 onwards
    High
    Indigenization
    Indigenization percentage for Next-Generation Corvette and P-17 Alpha
    85-90%
    High
    Market Growth
    Autonomous platforms market potential
    boom
    Medium
    Financials
    Provision write-back
    H2 FY26
    High
    Financials
    Provision write-back split (FY26/FY27)
    50-50
    High

    Next-generation corvette project contract conclusion

    by end of FY26
    CurrentNegotiations in progress
    TargetContract concluded

    Why it matters

    This is a high-value order (₹25,000 crores) crucial for future revenue visibility and order book growth.

    The contract negotiations for the next-generation corvette project is currently in progress with the Ministry of Defense and Navy. And this is going to be a high-value order. ... And I expect this contract to be concluded during the current financial year.

    How to verify

    order_book.pipeline

    Risks & concerns

    1
    RiskSeverity

    Nascent stage of autonomous platforms market

    Development of autonomous platforms is still at a nascent stage, requiring 2-3 years for market maturity, though GRSE is geared up for it.Management acknowledged

    low

    Q&A highlights

    8

    “As far as the receivables are concerned, when we say we are delivering a ship, we would already have received almost 95% of the total project cost. ... As far as revenue recognition is concerned, in this particular project, the entire revenue recognition happens at the time of delivery. So, with the first P-17 Alpha, we have realized the full revenue. And as far as the second P-17 Alpha is concerned, the ship is currently at 80% physical progress. And since the delivery of this ship is planned during April 2026, I appreciate that by March end we should be able to accrue almost 90%, 92% of the revenue.”

    Clarifies the revenue recognition policy for large defense projects, indicating that most revenue is recognized upon delivery and a significant portion of the second P-17 Alpha's revenue will be accrued by March 2026.

    asked by Dipen Vakil

    3 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Project Deliveries and Progress

    GRSE achieved significant project milestones in Q1 FY26. The company delivered the third Survey Vessel Large on August 14, 2025, and the first Anti-Submarine Shallow Water Craft. Notably, the first P-17 Alpha ship, the largest weapon platform built by GRSE, was delivered ahead of schedule on July 31, 2025. The second P-17 Alpha ship has reached 80% physical progress and is expected to be delivered by April 2026, with the last ship by August 2026. The second Anti-Submarine Shallow Water Craft is 97% complete and expected for delivery by end of August 2025, with two more ships planned for delivery in FY26.

    02

    Robust Order Book and Strong Pipeline

    As of June 30, 2025, GRSE's order book stands at a healthy ₹21,700 crores, comprising 10 projects and 40 marine platforms. Defense shipbuilding accounts for 86% of the order book, with non-defense (research vessels, exports) making up 14%. The company has been declared the L1 bidder for the high-value next-generation corvette project, estimated at ₹25,000 crores, with contract conclusion expected this financial year. Additionally, GRSE anticipates signing a contract for four more Multipurpose Vessels by mid-September and expects RFPs for various naval and Coast Guard projects totaling significant value over the next 18 months, including the P-17 Bravo project worth ₹70,000 crores.

    03

    Capacity Expansion and Greenfield Initiatives

    GRSE is aggressively expanding its shipbuilding capacity, aiming to increase from the current 28 platforms to 32 by 2026 and further to 40 by 2029. This expansion includes acquiring an additional dry dock in Kolkata to boost ship repair capabilities. The company is also progressing with land finalization for a 30-plus acre Greenfield Shipbuilding Facility in West Bengal, with production expected to commence within a year. Furthermore, GRSE is in discussions to acquire another greenfield shipyard on either the West or East Coast of India within a year to cater to larger platforms and commercial shipbuilding opportunities.

    04

    New Product Development and Indigenization Focus

    GRSE is actively engaged in new product development, particularly in autonomous platforms. The Unmanned Underwater Platform has successfully completed prototype trials, and an order for an Unmanned Surface Vessel has been executed for a DRDO organization. While the autonomous market is nascent, management expects significant growth in 2-3 years. The company also highlights its leadership in green vessel technology and indigenous Bailey bridges. Indigenization levels for the P-17 Alpha project are currently 80-85%, with a target to increase to 85-90% for future projects like the Next-Generation Corvette and P-17 Bravo.

    05

    Subcontracting and Financial Outlook

    Subcontracting costs increased to ₹235 crores from ₹131 crores in the previous period, which management attributes to the natural phenomenon of projects reaching maximum revenue accrual stages. This level of subcontracting (around 15% of sales) is expected to continue. While specific Q1 FY26 financial numbers were not disclosed in the call, management expressed confidence in maintaining the top line and bottom line growth tempo in FY26 and FY27, similar to FY25, when the company crossed ₹5,000 crores in top line and ₹500 crores in PAT. A provision write-back, not factored in Q1, is expected to be recognized in H2 FY26, split 50-50 between FY26 and FY27.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.