Garden Reach Sh.

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.

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.

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.

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 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.