Garden Reach Shipbuilders & Engineers Limited — Q1 FY26 earnings call

Call held 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

  • 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 they filed

Q1 FY27: revenue up 38.5%, net profit up 44.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,153 1,271 1,642 1,310 1,677 +45%1,896 +49%2,119 +29%1,815 +39%
EBITDA69 75 221 112 156 +126%172 +129%355 +61%149 +33%
Net profit98 98 244 120 154 +57%171 +74%303 +24%173 +44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹21,700 Cr

as of 2025-06-30 quantified

Execution

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

Composition

Mix 6 segments
  • Defense Shipbuilding 86%
  • Non-Defense Shipbuilding 14%
  • Research Vessels (within Non-Defense) 9%
  • Export (within Non-Defense) 5%
  • Ship Repair 1%
  • Bridges & Diesel Engine Plant 0.5%

Share of order book by segment· categories overlap, and sum to 115.5%

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

high confidence
  • Capex Capex disclosed
    • Revamping and revitalizing existing facilities to increase shipbuilding capacity
    • Acquiring one more dry dock in Kolkata from Syama Prasad Mookerjee Port for ship repair capacity
    • Setting up a Greenfield Shipbuilding Facility (approx. 30+ acres) in West Bengal
    • Setting up a greenfield shipyard on West or East Coast of India
    through revamping and revitalizing some of our facilities, we have increased the shipbuilding capacity to 24 ships. ... As part of our expansion plan, we intend acquiring one more dry dock in Kolkata from the Syama Prasad Mookerjee Port. ... In addition, we are planning to set up a Greenfield Shipbuilding Facility. Within West Bengal, the land finalization is in progress, it is approximately 30-plus acres of land. ... we intend setting up a greenfield shipyard either on the West or East Coast of India.
  • M&A Dry dock from Syama Prasad Mookerjee Port Acquisition · Pending regulatory

    To further augment capacity for ship repair.

    As part of our expansion plan, we intend acquiring one more dry dock in Kolkata from the Syama Prasad Mookerjee Port. The final discussions are in progress. And this will further augment our capacity for ship repair.
  • M&A Greenfield Shipbuilding Facility land Acquisition · Pending regulatory

    To commence production and increase shipbuilding capacity.

    In addition, we are planning to set up a Greenfield Shipbuilding Facility. Within West Bengal, the land finalization is in progress, it is approximately 30-plus acres of land. And we intend to commencing production here, which means we will be starting the preparatory activities within a couple of months, and we intend commencing production here within a year.
  • M&A Greenfield shipyard (West or East Coast) Acquisition · Pending regulatory

    To further increase capacity beyond geographical limitations in Kolkata and tap into commercial shipbuilding opportunities.

    we intend setting up a greenfield shipyard either on the West or East Coast of India. And we have already identified suitable areas; the discussions and deliberations are currently in progress. And within a year, we will conclude the negotiations and acquire this facility.
  • M&A Pipavav Shipyard Joint venture · Announced

    Collaboration for construction of larger platforms, as GRSE's current capacity is up to 200-plus meters.

    Coming to our affair or the association with Pipavav, it's an MOU for construction, collaboration towards construction of larger platforms. Currently, the capacity that we have is for construction of vessels up to 200-plus meters. And some of the offers available in the market, we realized there for platforms well beyond this particular size. So, we thought that we should have a collaboration with the yard has got that kind of facility. And discussions are in progress, and we are very confident that in the coming years, we could translate this MOU into a couple of orders.

Guidance & targets

Project Delivery

  • P-17 Alpha second ship delivery Project Delivery · April 2026 · High confidence April 2026
    The ship which has achieved around 80% progress is expected to be delivered by April 2026

    — P. R. Hari

  • P-17 Alpha last ship delivery Project Delivery · August 2026 · High confidence August 2026
    and the last ship by August 2026.

    — P. R. Hari

  • Survey Vessel (Large) last ship delivery Project Delivery · CY2025 · High confidence end of this calendar year
    this shift is expected to be delivered by the end of this calendar year.

    — P. R. Hari

  • Anti-Submarine Shallow Water Craft second ship delivery Project Delivery · August 2025 · High confidence end of this month
    this ship is expected to be delivered to the Indian Navy by the end of this month.

    — P. R. Hari

  • Anti-Submarine Shallow Water Craft two more ships delivery Project Delivery · FY26 · High confidence during the current financial year
    We also intend delivery of two more ships of this project during the current financial year.

    — P. R. Hari

  • Anti-Submarine Shallow Water Craft balance ships delivery Project Delivery · CY2026 · High confidence end of next calendar year (2026)
    by the end of next calendar year, that is by end of 2026, we will be completing this project by delivering the balance ships.

    — P. R. Hari

  • Next-generation corvette project first ship delivery Project Delivery · CY2031 · High confidence by 2031
    Now for the first ship delivery, as I understand, the first ship delivery would be by 2031.

    — P. R. Hari

  • Next-generation corvette project last ship delivery Project Delivery · CY2034 · High confidence by 2034
    And the last ship delivery, because rather we would be constructing five ships be 2034

    — P. R. Hari

Project Completion

  • Next-Generation Offshore Petrol Vessel project completion Project Completion · CY2028 · High confidence calendar year 2028 (FY29)
    The project is expected to be completed as per schedule by calendar year 2028, that is Financial Year 2029.

    — P. R. Hari

Order Inflow

  • Next-generation corvette project contract conclusion Order Inflow · FY26 · High confidence during this financial year
    I expect this contract to be concluded during the current financial year.

    — P. R. Hari

  • Multipurpose Vessels (another four) contract signing Order Inflow · September 2025 · High confidence mid-September (within a month)
    The contract is expected to be signed by mid-September; within a month we should be signing this contract.

    — P. R. Hari

  • Next-Generation Survey Vessels & Fast Patrol Vessels bid declaration Order Inflow · CY2025 · High confidence around the end of this calendar year
    We expect the bid declaration to be somewhere around the end of this calendar year.

    — P. R. Hari

  • RFP for 31 follow-on Next-Generation Water Jets FACs Order Inflow · FY26 · High confidence towards end of this financial year
    I expect the RFP to come out towards end of this financial year.

    — P. R. Hari

  • Various RFPs (Coast Guard, Navy) Order Inflow · next 18 months · High confidence from now to over a period of next 18 months
    All these RFPs are likely to come out from now to over a period of next 18 months.

    — P. R. Hari

  • P-17 Bravo project RFP Order Inflow · CY2025 · High confidence by the end of this calendar year
    The RFP is likely to be floated by the Navy by the end of this calendar year.

    — P. R. Hari

Capacity

  • Shipbuilding capacity Capacity · by 2026 · High confidence 32 ships

    From 28 ships today

    And now we have a capacity to build 28 platforms, 8 large and 20 medium and small platforms. And with the kind of modernization that we are currently progressing, by 2026, we intend increasing this capacity to 32 ships.

    — P. R. Hari

  • Shipbuilding capacity Capacity · by 2029 (within next four years) · High confidence 40 ships

    From 32 ships today

    Now before I come to the Pipavav question that you asked, what our target is, within the next four years, that means by 2029, we intend ramping up our shipbuilding capacity to 40.

    — P. R. Hari

Production

  • Greenfield facility production commencement Production · within 1 year · High confidence within a year
    we intend commencing production here within a year.

    — P. R. Hari

Acquisition

  • Greenfield shipyard acquisition Acquisition · within 1 year · High confidence within a year
    And within a year, we will conclude the negotiations and acquire this facility.

    — P. R. Hari

Revenue Recognition

  • P-17 Alpha second ship revenue accrual Revenue Recognition · by March end (2026) · High confidence 90-92%
    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.

    — P. R. Hari

  • Next-generation corvette project revenue recognition Revenue Recognition · FY28 onwards · High confidence from FY '28 onwards
    And as far as revenue recognition is concerned, we expect this project to give us revenue from FY '28 onwards.

    — P. R. Hari

Indigenization

  • Indigenization percentage for Next-Generation Corvette and P-17 Alpha Indigenization · over this period of time · High confidence 85-90%

    From 80-85% (P-17 Alpha) today

    And in case of the Next-Generation Corvette and the P-17 Alpha, with more equipment getting indigenized over this period of time, we expect the indigenization percentage to be between 85% and 90%.

    — P. R. Hari

Market Growth

  • Autonomous platforms market potential Market Growth · next two to three years · Medium confidence boom

    From nascent stage today

    Still, I would like to place this clearly that development of such platforms, as a nation, it is still at nascent stage. I expect more maturity to come in this entire segment in the coming two to three years. The opportunities and potential definitely see a huge pride. We are fully geared up for that and our advantage is that as a big company, we have invested, taken partners who are capable and have developed products. Now it's a question of fine-tuning to meet the customer requirements. As I said in the next, okay, two to three years we expect the potential to really boom.

    — P. R. Hari

Financials

  • Provision write-back Financials · H2 FY26 · High confidence H2 FY26
    No, we have not factored it in the Q1. As you rightly said, that we will be considering it in the H2, perhaps the first half of H2.

    — P. R. Hari

  • Provision write-back split (FY26/FY27) Financials · FY26/FY27 · High confidence 50-50
    Almost 50-50.

    — P. R. Hari

What to watch in Q2 FY26

Next-generation corvette project contract conclusion

by end of FY26
Current Negotiations in progress
Target Contract 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.

Risks & concerns

  • Nascent stage of autonomous platforms market

    low

    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

Q&A highlights

8 direct
Revenue recognition for P-17 Alpha project and milestones Direct
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

Progress on autonomous underwater vehicles and market opportunities Direct
We have developed an Unmanned Underwater Platform. And this platform has already undergone its prototype trials satisfactorily at Leh in Kashmir. ... We had developed this product in 2023. In 2024, we have already executed order for one of the DRDO organizations, the NSDL, Visakhapatnam. ... Still, I would like to place this clearly that development of such platforms, as a nation, it is still at nascent stage. I expect more maturity to come in this entire segment in the coming two to three years.

Highlights GRSE's new product development in autonomous platforms, including successful trials and initial orders, while also setting realistic expectations for market maturity in the next 2-3 years.

Asked by Dipen Vakil

Margins and revenue outlook for FY27/FY28 given P-17 Alpha project nearing completion Direct
the P-17 Alpha project is on moving very much on schedule and we intend completing the project by mid-2026, that is August 2026. And since this project is a big-ticket item, we expect both the top line and the bottom line to maintain the tempo that we have sustained over the last three years. ... With the P-17 Alpha project being the biggest revenue earner and, of course, it's the high-value project, I expect similar growth in FY '26 as well as FY '27 in terms of both top line and bottom line.

Addresses concerns about revenue and margin sustainability post-P-17 Alpha, with management expecting continued growth in FY26 and FY27 due to the project's significant contribution and ongoing execution.

Asked by Krishna Doshi

Timeline for next-generation corvette order signing and first ship delivery Direct
Most optimistically, this is exactly what I mentioned during the last con call that most optimistically the contract could get signed by end of the calendar year, that is by December. And on a conservative fashion, because the process involved that takes a bit of time, by the financial year end. ... Now for the first ship delivery, as I understand, the first ship delivery would be by 2031. ... And as far as revenue recognition is concerned, we expect this project to give us revenue from FY '28 onwards.

Provides a clear timeline for the high-value next-generation corvette project, from contract signing to first delivery and revenue recognition, offering long-term visibility.

Asked by Krishna Doshi

Level of indigenization for P-17 Alpha, Next-Generation Corvette, and P-17 Bravo projects Direct
if you take the overall ship, you asked a specific question of P-17 Alpha, the indigenization content all put together is plus 80%, it is between 80% and 85%. And in case of the Next-Generation Corvette and the P-17 Alpha, with more equipment getting indigenized over this period of time, we expect the indigenization percentage to be between 85% and 90%.

Details the current and target indigenization levels for key projects, highlighting a strong focus on domestic content, particularly in the 'float' and 'survive' elements.

Asked by Amit Dixit

Purpose and capabilities of the planned Greenfield Shipyard (deep-water, destroyers, submarines) Direct
we are looking for a Greenfield Shipyard, primarily because what we have today in Kolkata is just enough. ... And we also want to set up a shipyard which does not have any draft issue and depth limitation. So naturally, it would be along the sea and the facility would cater for platforms up to destroyers and large commercial ships. ... Submarines requires facility as well as capability. But as a shipyard, at this juncture, we do not intend going into submarine building.

Clarifies the strategic intent behind the greenfield shipyard, confirming its focus on larger surface vessels (up to destroyers) and commercial ships, while explicitly ruling out submarine construction due to expertise requirements.

Asked by Amit Dixit

Breakup of the current order book Direct
Our current order book stands at ₹21,700 crores, and that is comprised of 10 Marine Platforms. ... 86% is coming from defense shipbuilding and balance nondefense shipbuilding, which we have branched out about two to three years back is now contributing the shipbuilding order book composition of around 14%. Of this, research vessels around 9% and the export is around 5%. The other business vertical, ship repair, yes, the orders of course they keep coming, it's a dynamic situation. Right now, about 1% is from ship repair, the bridges and the diesel engine plant about 0.5% and so on.

Provides a detailed breakdown of the ₹21,700 crore order book by project type, client, and segment, offering clarity on revenue streams and diversification efforts.

Asked by Harshit Kapadia

Timing of provision write-back mentioned in Q4 results Direct
No, we have not factored it in the Q1. As you rightly said, that we will be considering it in the H2, perhaps the first half of H2. ... Almost 50-50.

Clarifies the timing for the recognition of a significant provision write-back, indicating it will occur in H2 FY26, with a 50-50 split between FY26 and FY27.

Asked by Harshit Kapadia

3 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

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