Garden Reach Shipbuilders & Engineers Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Garden Reach Shipbuilders & Engineers Ltd. reported a strong Q2 FY26, with revenue from operations growing 45% YoY to ₹1,677 crores and PAT increasing 57% YoY to ₹154 crores. The company's order book stands at ₹20,205.56 crores, supported by ongoing projects and a robust pipeline including the Next-Generation Corvette where GRSE is L1. Management expressed confidence in maintaining growth momentum and outlined significant capacity expansion plans to meet future demand.

Highlights

  • Revenue from operations grew 45% YoY to ₹1,677 crores, demonstrating strong growth momentum.

  • Profit After Tax (PAT) increased 57% YoY to ₹154 crores, indicating improved profitability.

  • Order book of ₹20,205.56 crores provides strong revenue visibility, with significant pipeline opportunities.

  • First P-17 Alpha frigate delivered ahead of schedule, and the second is ready for Contractor Sea Trials, showcasing efficient project execution.

  • Two Anti-Submarine Shallow Water Craft vessels delivered, with the third ready for delivery, highlighting consistent project milestones.

Key financials

2 periods

Headline

  • Revenue from Operations
    ₹1,677 Cr
    YoY +45%
  • Total Income
    —
    YoY +42%
  • Profit After Tax
    ₹154 Cr
    YoY +57%

H1

  • FY26 Revenue
    ₹2,942 Cr

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

₹20,205.56 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹900 Cr

Composition

Mix 2 client types
  • Defence 83%
  • Non-Defence 17%

Share of order book by client type

Pipeline

L1 awaiting loa

Total likely order value from RFPs issued (18 SPV, 5 Next-Gen Survey, 2 Multi-Purpose Vessels) is ₹8,700 crores. Total AoN value for 7 projects (P-17 Bravo, MCMV, FIC, FIB, Waterjet FACS, LPD, NOPV) is ₹1,52,000 crores. L1 for Next-Generation Corvette (NGC) project (₹51,000 crores per ship). RFP for 7 more Naval Guns, inquiry for nearly 50 guns.

The company has a strong order book and a significant pipeline of future orders, both defence and commercial, ensuring robust growth prospects.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Brownfield expansion in West Bengal (3 pockets)
    • Greenfield shipyard in West Coast
    So, we are going in for a brownfield expansion between West Bengal in three pockets, and I mean the pockets in three separate areas and a greenfield shipyard in the West Coast.
  • Liquidity Cash ₹3,009 Cr Own funds are ₹283 crores and project funds are ₹2,874 crores, parked for payments to partners and other requirements.
    See, our own funds are 283 crores and project funds are 2,874 crores, which we have parked so that the payment especially from our side is for our partners or for other requirements.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 25-30%
    We have been maintaining about 25% to 30% year-on-year growth and we expect to maintain similar trend during the current financial year too.

    — P.R. Hari

Order Book

  • Order Book Value Order Book · FY26 · High confidence ₹50,000 crores
    And we are confident of ending the financial year with an order book plus 50,000 crores, which is well above the highest order book position that the company ever had.

    — P.R. Hari

  • Order Book Value Order Book · next 15 to 18 months · Medium confidence ₹75,000 crores
    order book of today of 20,000 crores maybe in the next 15 to 18 months could be upwards of ₹75,000 crores. Is my directional assumption, correct? That's what I would like to understand. Not in number, but maybe directional. Absolutely right. And they are of the same frequency. I just hope your words come true.

    — P.R. Hari

Capacity

  • Concurrent Construction Capacity Capacity · 2026 · High confidence 32 ships

    Previously 28 ships → 32 ships

    our shipbuilding capacity increased from 24 ships concurrent construction to 28 ships during 2024-2025 and with the ongoing modernization, we intend to increasing this to 32 ships by 2026.

    — P.R. Hari

  • Concurrent Construction Capacity Capacity · 4 years · Medium confidence 40 ships

    Previously 32 ships → 40 ships

    In our appreciation in around 4 years, the shipbuilding capacity shall be increased from the envisaged 32 during 2026 to 40.

    — P.R. Hari

Project Milestone

  • NGC Contract Signing Project Milestone · next 3 to 4 months (FY26) · High confidence signed
    I am happy to inform you that the contract negotiations are in final stages, and we expect the contract to be signed in the next 3 to 4 months, which means in this financial year.

    — P.R. Hari

  • P-17 Bravo RFP Issuance Project Milestone · current financial year · High confidence issued
    We expect the RFP to come out during the current financial year.

    — P.R. Hari

  • P-17 Bravo Contract Signing Project Milestone · 2 to 2.5 years from now · Medium confidence signed
    So about 2 to 2.5 years from now, the contract is expected to be signed.

    — P.R. Hari

  • Anti-Submarine Shallow Water Craft (4th & 5th ship) Delivery Project Milestone · first half of 2026 · High confidence delivered
    we are targeting delivery of both these ships during the first half of 2026.

    — P.R. Hari

  • Anti-Submarine Shallow Water Craft (6th, 7th, 8th ship) Completion Project Milestone · end of next year · High confidence completed
    by end of next year, we will be completing the Anti-Submarine Shallow Water Craft project.

    — P.R. Hari

  • Next Generation Offshore Patrol Vessel (1st & 2nd ship) Launch Project Milestone · early 2026 · High confidence launched
    The first two ships, Ship 1 and Ship 2, shall be launched during early 2026

    — P.R. Hari

  • Next Generation Offshore Patrol Vessel (3rd & 4th ship) Launch Project Milestone · latter half of 2026 · High confidence launched
    and the next two ships shall be launched during the latter half of 2026.

    — P.R. Hari

  • Next Generation Offshore Patrol Vessel Delivery Project Milestone · 2028 · High confidence delivered
    This delivery of these vessels as per contract is scheduled by 2028.

    — P.R. Hari

  • Hybrid Vessel Delivery Commencement Project Milestone · early 2026 · High confidence commence
    the delivery of these vessels shall commence from early 2026.

    — P.R. Hari

  • Hybrid Vessel Project Completion Project Milestone · 2027 · High confidence completed
    The project completion is scheduled by 2027.

    — P.R. Hari

  • Multi-purpose Vessels (German client) Delivery Project Milestone · 2029 · High confidence completed
    The delivery of these vessels is expected to be completed by 2029.

    — P.R. Hari

  • Low-value project (₹135 crores) Delivery Project Milestone · mid-2027 · High confidence delivered
    The delivery of this vessel is planned during mid-2027

    — P.R. Hari

  • Ocean Going, Acoustic Research Ship, Coastal Research Vessels Delivery Project Milestone · 2027 and 2028 · High confidence delivered
    the delivery of these vessels are planned between 2027 and 2028.

    — P.R. Hari

  • Naval Guns (6 weapons) Supply Project Milestone · next 4 months · High confidence supplied
    the next 6 shall be supplied in the next 4 months.

    — P.R. Hari

What to watch in Q3 FY26

NGC Contract Signing

next 3-4 months (FY26)
Current Negotiations in final stages, L1 status
Target Contract signed

Why it matters

Signing of this high-value contract is crucial for future order book and revenue visibility.

I am happy to inform you that the contract negotiations are in final stages, and we expect the contract to be signed in the next 3 to 4 months, which means in this financial year.

Q&A highlights

6 direct, 1 evasive
LPD Project Details and GRSE's Participation Direct
The 4-ship project with an order value likely to the tune of around 35,000 crores. Next question, who all. The three of us i.e., MDL, HSL, GRSE plus Cochin Shipyard plus L&T. This is the expected players in the field for this project.

Analyst sought clarity on a high-value pipeline project, including its size, competitors, and GRSE's potential involvement, which is crucial for future order book visibility.

Asked by Amit Dixit

Next-Generation Corvette (NGC) Project Delays and Trickle-down Orders Direct
I am happy to inform you that the contract negotiations are in final stages, and we expect the contract to be signed in the next 3 to 4 months, which means in this financial year. ... So, they can be rest assured that many of these orders could trickle-down during FY '27 starting from the first half onwards.

Analyst inquired about the status of the significant NGC project and its impact on smaller, 'trickle-down' orders for vendors, which management clarified with a timeline for contract signing and vendor orders.

Asked by Amit Dixit

Potential Revenue Depletion from Order Book Conversion Direct
No. I don't expect that purely because, the P-17 Alpha project is very much on even as of now and so the second major project, the Anti-Submarine Shallow Water Craft project. And those two projects are likely to extend to one of them mid of next year and the second one end of next year. So, I don't see any revenue depletion in the next 2 to 3 or 3 to 4 quarters.

Analyst raised a concern about potential revenue decline as current large projects conclude before new ones ramp up, which management addressed by highlighting ongoing project timelines and new order inflows.

Asked by Amit Dixit

NGC Project Margins Partial
this being a high-value project, I would just state - I'll go back to what I normally say shipbuilding in conventional shipbuilding, good margin, the PAT margin would be around 7.5 percentage, and we can assure our investors and partners that we'll be getting well beyond that. So, margins will not be wafered there.

Analyst sought specific margin guidance for the large NGC project, and management provided a general PAT margin expectation for conventional shipbuilding, implying similar or better for NGC without giving a precise figure.

Asked by Krishna Doshi

Higher Gross Margins and Subcontracting Costs Direct
As a strategy, our non-core jobs, including a certain amount of construction activities are outsourced. So, it is not natural that as the overall revenue increases, the subcontracting cost also increases, and that is purely a natural phenomenon, and no matter of concern. Now coming to margins. Right now, we are recognizing maximum revenues from the P-17 Alpha project.

Analyst questioned the simultaneous increase in gross margins and subcontracting costs, which management explained as a strategic outsourcing decision and attributed current high margins to the advanced stage of the profitable P-17 Alpha project.

Asked by Krishna Doshi

Corporate Actions (Stock Split/Bonus) Evasive
See, we are purely guided by DIPAM guidelines, and we are waiting for instructions from them. And as and when we get to know, our investors will be the first to know from us. At this juncture, we are waiting for further directives from DIPAM.

Analyst inquired about potential shareholder-friendly corporate actions, but management indicated they are awaiting government directives, providing no specific timeline or commitment.

Asked by Yash

Revenue Strategy After FY28 and Plateauing Direct
I also mentioned that I said it will plateau from 2 to 4 years, I think up to 2 years, definitely, the spike what we are maintaining will continue, then it will plateau and thereafter, it will spike again. Because that is the time when the Next-Generation Corvette will start giving us revenue in a substantial fashion.

Analyst sought clarity on the long-term revenue trajectory beyond FY28, given management's previous comments about plateauing, which management explained as a temporary phase before the NGC project significantly contributes.

Asked by Divyesh Shah

Differentiation of GRSE's 30mm Naval Guns vs AK630 Direct
These are for two different purposes. One is for anti-aircraft engagement and close in weapon-system and 30 mm is for a different purpose, it is naval and coast guard surface gun. ... So, we do not see the proven 630 as a challenge at all. Rather, we do not see 30 mm as a challenge to 630. Both are two totally different purpose, totally different identities.

Analyst questioned how GRSE's newly developed 30mm Naval Guns differentiate from the existing AK630, which management clarified by explaining their distinct purposes and applications.

Asked by Rohit Priyadarshi

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Garden Reach Shipbuilders & Engineers Ltd. delivered a strong financial performance in Q2 FY26. Revenue from operations surged by 45% year-on-year, reaching ₹1,677 crores. The total income also saw a significant increase of 42% year-on-year. This robust top-line growth translated into a 57% year-on-year increase in Profit After Tax (PAT), which stood at ₹154 crores for the quarter. The company's H1 FY26 revenue was ₹2,942 crores, indicating consistent performance.

Current Order Book and Project Execution Status

As of September 30, 2025, GRSE's order book was ₹20,205.56 crores, with ₹900 crores of new orders obtained during Q2 FY26. The order book is composed of 83% defence and 17% non-defence projects. Key ongoing projects include the P-17 Alpha frigates (first delivered, second ready for trials), Anti-Submarine Shallow Water Crafts (two delivered, third ready for delivery, 4th/5th targeting H1 FY26 delivery), Next-Generation Offshore Patrol Vessels (first two launching early 2026), and various export and research vessels. The remaining order balance for P-17 Alpha is ₹9,500 crores, Anti-Submarine Shallow Water Craft is ₹3,075 crores, and Next-Generation Offshore Patrol Vessel is ₹3,250 crores.

Future Order Pipeline and Growth Outlook

GRSE has a substantial future order pipeline. RFPs have been issued for projects worth ₹8,700 crores (18 SPV, 5 Next-Gen Survey, 2 Multi-Purpose Vessels). Additionally, projects with Approval of Necessity (AoN) totaling ₹1,52,000 crores have been accorded, including P-17 Bravo, MCMV, and LPDs. The company is L1 for the Next-Generation Corvette (NGC) project, valued at approximately ₹51,000 crores per ship, with contract signing expected in the next 3-4 months. Management anticipates ending FY26 with an order book exceeding ₹50,000 crores and potentially reaching ₹75,000 crores in 15-18 months.

Capacity Expansion Initiatives

To support future growth and meet increasing demand, GRSE is actively pursuing capacity expansion. The company plans to increase its concurrent shipbuilding capacity from 28 ships (2024-25) to 32 ships by 2026, and further to 40 ships within approximately four years. This expansion includes brownfield projects in three locations in West Bengal, with development already underway in at least two areas. A greenfield shipyard project on the West Coast is also in the DPR (Detailed Project Report) preparation phase, with fructification expected in 3-4 years.

Naval Gun Program Update

GRSE is making significant strides in its Naval Surface Gun program, developed in collaboration with an establishment partner. The company has successfully completed acceptance trials for its 30mm Naval Surface Gun. Management expects more orders from the Indian Navy and Coast Guard for these guns, as they are well-suited for medium-sized and small-sized platforms. An RFP for 7 more guns has been received, and an inquiry for nearly 50 guns is also in process, indicating a strong demand pipeline for this new product.

Capital Allocation and Liquidity

The company maintains a healthy liquidity position, with cash and equivalents totaling ₹3,009 crores. This includes ₹283 crores of own funds and ₹2,874 crores of project funds, which are earmarked for payments to partners and other operational requirements. While no specific capex amounts were disclosed for the current quarter, the brownfield and greenfield expansion plans are significant capital allocation initiatives. The company is awaiting DIPAM guidelines regarding potential corporate actions like stock splits or bonuses.

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