Garden Reach Shipbuilders & Engineers Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Garden Reach Shipbuilders & Engineers Ltd. reported robust Q3 FY26 results with significant YoY growth in both revenue and PAT, driven by strong execution. The company maintains a healthy order book and a substantial pipeline of potential orders, supported by ongoing capacity expansion and strategic partnerships. Management anticipates FY27 to be a peak revenue year and is focused on sustaining growth beyond that.

Highlights

  • Revenue from operations for Q3 FY26 grew 49% YoY to ₹1,896 crores from ₹1,271 crores in Q3 FY25.

  • Profit After Tax (PAT) for Q3 FY26 increased 74% YoY to ₹171 crores from ₹98 crores in Q3 FY25.

  • 9M FY26 revenue of ₹4,883 crores is close to full FY25 revenue of ₹5,076 crores, indicating strong execution pace.

  • Order book position of ₹18,482 crores as of December 31, 2025, with a significant pipeline of potential orders (₹2.5 lakh crores+).

  • Successfully delivered 5 major platforms in the first nine months of FY26 and plans to deliver 3 more in the next three months.

Concerns

  • Potential for revenue plateauing in FY28 after a projected peak in FY27, though management aims to mitigate this.

  • New greenfield capacity expansion in Gujarat has a conservative 3-year timeline for production readiness.

  • Higher competition in the non-defense segment compared to the defense sector.

Key financials

3 periods

Q3 FY26

  • Revenue from Operations
    ₹1,896 Cr
    YoY +49%
  • PAT
    ₹171 Cr
    YoY +74%

9M FY26

  • Revenue from Operations
    ₹4,883 Cr

FY25

  • Revenue from Operations
    ₹5,076 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

₹18,482 Cr

as of 2025-12-31 quantified

Execution

Delivered 5 major platforms in 9 months; intend to deliver 3 more in next 3 months.

Composition

Mix 2 segments
  • Defense (Total) 77%
  • Other smaller verticals (portable steel bridges, Diesel Engine Plant, Naval Surface Guns, ship repair) 5%

Share of order book by segment· partial disclosure (82% of the book)

Pipeline

qualified rfp

Potential orders from AON accorded projects and non-defense segment.

Order execution rate has picked up, leading to the order book dipping below ₹20,000 crores for the first time.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Enhancing production capacity from 24 to 32 ships by end of CY26 and 35 by end of 2026.
    • Brownfield expansion at 3 sites from Syama Prasad Mookerjee Port, with 2 sites starting production by end of CY26 and the 3rd in 2 years.
    • Greenfield expansion at 2 sites in Gujarat (Kandla and Bhavnagar) to build 12 large ships (300m length) within 3 years.
    • Investments in mechanization and automation, including welding machines, plasma cutting, and robotic welding.
    we have systematically increased our production capacity. Two years back we had a capacity to construct 24 platforms concurrently. Today, that is in 2025, we increased it to 28 platforms. ... by the end of this calendar year, we intend on enhancing this to 32 ships. ... we should be able to get to around 35 ships by 2026, end of 2026. ... Our conservative estimate is 3 years from now. And this should meet the demand for large-size platforms, both in India and for abroad because we are getting a lot of queries from abroad. ... we are going in for brownfield as well as greenfield expansion. ... 2 sites we have taken over from the Syama Prasad Mookerjee Port ... physically started the modernization activities to get them to production level readiness. ... we expect the production to commence there after the modernization efforts are completed in a span of two years. ... we have moved ahead with the finalization of 2 sites in Gujarat ... As far as automation is concerned, yes, this is an imperative, and we already started investing, and should you visit our facilities, we have some of the best in terms of the welding machines, the plasma cutting machines, the robotic welding machines, and so on.
  • M&A Swan Defence Joint venture · Pending regulatory

    For bidding and executing large platforms (vessels above 250 meters length) that GRSE cannot handle at its premises.

    Expected to translate into an order in the next financial year.

    we have live MOU with Swan Defence. The intent of this MOU was for bidding and executing large platforms, the platforms which we cannot handle at our premises. ... We expect this to see light of the day, I mean, translating into an order in the next financial year.
  • M&A Hindustan Shipyard (HSL) Joint venture · Signed

    To bid for the LPD (Landing Platform Dock) project, leveraging GRSE's expertise and HSL's infrastructure.

    Enables GRSE to participate in the LPD project, which it couldn't due to dock size limitations.

    Coming to HSL we have signed a consortium agreement with them and MOU with them very recently. This is with an intent to put our hat in the ring for the LPD project, because we as GRSE purely because of the dock size, we would not have been able to bid for that.

Guidance & targets

Order Book

  • Total Order Book Value Order Book · FY26 end · High confidence ₹50,000 crores
    we are hopeful and confident of ending the current financial year with an order book around ₹50,000 crores.

    — P. R. Hari

  • Total Order Book Value Order Book · FY27 end · Medium confidence ₹70,000 crores
    if things go on well, we would like to look at ending FY '27 with an order book plus around ₹70,000 crores.

    — P. R. Hari

Revenue

  • Revenue CAGR Revenue · FY26 · High confidence 25-30%
    this financial year, that is FY '27, is going to be a peak year because that is when one piece of an Alpha would have just come out now, I mean, maybe in another, by April means we will get a substantial amount there, but the last one will definitely come out during FY '27. So, '27 is going to be the peak year.

    — P. R. Hari

Capacity

  • Concurrent Platforms Capacity · end of CY26 · High confidence 32 ships

    Previously 28 ships → 32 ships

    by the end of this calendar year, we intend on enhancing this to 32 ships.

    — P. R. Hari

  • Concurrent Platforms Capacity · end of 2026 · High confidence 35 ships
    we should be able to get to around 35 ships by 2026, end of 2026.

    — P. R. Hari

Project Completion

  • 30mm Guns Project Completion Project Completion · mid-2027 · High confidence 17 guns
    we intend completing this project by mid of 2027, when all the 17 guns will be supplied.

    — P. R. Hari

Order Inflow

  • Coast Guard 30mm Guns Contract Order Inflow · mid-this year (Q1 FY27) · High confidence 49 naval surface guns
    We expect the contract to be concluded by mid of this year. That means in the 1st Quarter of FY '27, we intend concluding the contract.

    — P. R. Hari

Revenue Accrual

  • Next-Generation Corvette Revenue Accrual Revenue Accrual · Q4 FY28 · High confidence Commence
    the revenue accrual will commence two years down the line, which means if FY '26 end we are concluding the contract, FY '28 end, that means the 4th Quarter of FY '28 we can expect revenue accrual.

    — P. R. Hari

Order Placement

  • Next-Generation Corvette Equipment Orders Order Placement · within 6 months of contract signing (H1 FY27) · High confidence Placed
    we expect to sign the contract with our OEMs within the first 6 months of placement of, I mean, receipt of contract which means in the first half of the next financial year, we will be able to place.

    — P. R. Hari

What to watch in Q4 FY26

Next-Generation Corvette Contract Signing

current financial year (FY26)
Current L1 declared, price negotiations completed
Target Contract signed

Why it matters

Securing this ₹33,000 crore project is crucial for future revenue visibility and order book growth.

It is a five-ship project amounting to approximately 33,000 crores and the price negotiations have been completed and the contract negotiations are in final stages. It requires certain approvals, but we are confident of this contract getting concluded during the current financial year, which means next month we intend closing this contract, signing the contract with the Indian Navy.

Risks & concerns

  • Higher competition in non-defense segment

    medium

    The competition pool is bigger in the non-defense segment compared to defense, requiring strategic partnerships.

    Management acknowledged

  • Longer timeline for new greenfield capacity to be production-ready

    medium

    Gujarat facilities have a conservative estimate of 3 years to become production-ready for large-size platforms.

    Management acknowledged

  • Potential revenue plateau in FY28 after FY27 peak

    medium

    Management acknowledges FY27 as a peak year and aims to avoid a plateau in FY28 by leveraging spares and one-off projects.

    Analyst aiming to avoid

  • Time taken for DAP 2026 finalization

    low

    The draft DAP 2026 is open for public comments and will take finite time to finalize.

    Management acknowledged

Q&A highlights

8 direct
Next-Generation Corvette execution cycle and P-17 Bravo project status Direct
the revenue accrual will commence two years down the line, which means if FY '26 end we are concluding the contract, FY '28 end, that means the 4th Quarter of FY '28 we can expect revenue accrual. ... I expect the RFP to come out, let us say, in April. If April the RFP come, I will give you further RFP is expected to come out in April, then the bid submission time and all. Akin to NGC, we expect the contract for P-17 Bravo to be signed maybe February, March 2027.

Clarifies the timeline for revenue recognition from the recently won Next-Generation Corvette order and provides an updated timeline for the significant P-17 Bravo project.

Asked by Hitesh Chaudhari

Strategic MoUs with Swan Defence and Hindustan Shipyard (HSL) Direct
The intent of this MOU was for bidding and executing large platforms, the platforms which we cannot handle at our premises. ... Coming to HSL we have signed a consortium agreement with them and MOU with them very recently. This is with an intent to put our hat in the ring for the LPD project, because we as GRSE purely because of the dock size, we would not have been able to bid for that.

Explains the rationale and strategic intent behind these partnerships, which are crucial for GRSE to bid for and execute larger and more complex projects beyond its current capacity.

Asked by Divyesh Shah

Margins on new orders and historical low-margin projects Direct
None of these, what I just discussed, none of them. Yes, we have taken a few orders at very low margins. That was for sustenance and entry, like I will give you an example. ... But right now, having consolidated our position in both the different shipbuilding as well as to an extent in commercial shipbuilding, margins will be, let us say, healthy. Order book enhancement will not be at the cost of margins.

Addresses concerns about potential margin dilution from aggressive order acquisition, with management confirming a focus on healthy margins for current and future orders.

Asked by Divyesh Shah

Revenue trajectory for FY27 and FY28 (peak vs. plateau) Direct
Next financial year, that is FY '27, is going to be a peak year because that is when one piece of an Alpha would have just come out now... So, '27 is going to be the peak year. ... we will try and avoid a plateauing out in FY '27, but FY '28, that is the intent of the management.

Provides clarity on the expected revenue growth trajectory, highlighting FY27 as a peak year and management's proactive efforts to prevent a revenue plateau in FY28.

Asked by Divyesh Shah

Detailed breakdown of the current order book Direct
our total order book is at 18,482 crores, and of this, still P-17 Alpha takes the major chunk. It is around 46% at 8,236 crores. Survey Vessel Large 343 crores, Anti-Submarine Shallow Water Crafts 2,559 crores, the OPV project 3,136 crores. So, from the defense segment, it is 14,276 crores. That comes to around 77% of our total order book.

Offers granular detail on the composition of the order book, providing insights into the key projects and segments driving current and future revenue.

Asked by Harshit Kapadia

Indigenous content and implications of draft DAP 2026 Direct
the indigenous content of the 3 projects that we have completed in the last 5 years completed, completed means done and dusted, it is plus 85%. ... DAP 2026 ... focuses definitely ... on indigenization. Indigenization and indigenization incentivization would be a major part of this DAP, and little more flexibility for public-private industry entry into defense manufacturing, and also for public-private partnership.

Highlights GRSE's strong track record in indigenization and how the upcoming DAP 2026 aligns with and supports the company's strategic direction and growth opportunities.

Asked by Amit Anwani

Outlook for 30mm guns project (capacity, margins, growth) Direct
Currently we got order for 17 guns and all from the Indian Navy. ... we intend completing this project by mid of 2027, when all the 17 guns will be supplied. ... Coast Guard has shown interest. We are having a discussion with Coast Guard for 49 more naval surface guns. We expect the contract to be concluded by mid of this year. ... So far, in this segment, there is no competition. So, we see this business picking up in the coming years.

Reveals a new growth avenue in the 30mm guns segment, detailing current orders, future potential from Coast Guard, and the competitive advantage of being the sole Indian player.

Asked by Krishna Doshi

Investments in people, automation, and mechanization for future scale Direct
we are inducting another 150 executives, 137 executives. And all of them, I can assure you, come from top institutions of the country, the best. ... As far as automation is concerned, yes, this is an imperative, and we already started investing, and should you visit our facilities, we have some of the best in terms of the welding machines, the plasma cutting machines, the robotic welding machines, and so on.

Demonstrates management's proactive approach to scaling up human capital and technological capabilities to meet future demand and maintain execution excellence.

Asked by Namit Arora

3 min read 5 chapters

Detailed narrative

Robust Q3 FY26 Performance and Strong 9M Growth

Garden Reach Shipbuilders & Engineers Ltd. delivered a strong Q3 FY26, with revenue from operations increasing by 49% year-on-year to ₹1,896 crores, up from ₹1,271 crores in Q3 FY25. Profit After Tax (PAT) also saw significant growth, rising 74% year-on-year to ₹171 crores from ₹98 crores in the prior year. For the nine months ended December 31, 2025, the company reported revenue of ₹4,883 crores, nearly matching its full FY25 revenue of ₹5,076 crores, indicating an accelerated execution pace. Management expects to achieve a revenue CAGR of 25-30% for the current financial year.

Substantial Order Book and Promising Pipeline

As of December 31, 2025, GRSE's order book stands at ₹18,482 crores, with the defense segment contributing 77% (₹14,276 crores), including ₹8,236 crores for P-17 Alpha frigates. The company has a robust pipeline of potential orders, including the recently won Next-Generation Corvette project worth ₹33,000 crores, and AON-accorded projects like P-17 Bravo (₹70,000 crores), LPD (₹35,000 crores), and Mine Counter Measure Vessels (₹32,000 crores), totaling ₹1,55,000 crores over the next 12 months. Additionally, the non-defense segment presents opportunities exceeding ₹1 lakh crores, with two tenders and one EOI currently live.

Aggressive Capacity Expansion and Modernization

GRSE is actively expanding its production capacity, aiming to increase concurrent platforms from 24 to 32 by the end of the current calendar year and to 35 by the end of 2026. This includes brownfield expansion at three sites acquired from Syama Prasad Mookerjee Port, with two sites expected to commence production by year-end. The company is also pursuing greenfield expansion with two sites in Gujarat (Kandla and Bhavnagar), projected to be production-ready in three years and capable of building 12 large ships of 300-meter length. Investments in advanced automation, such as robotic welding and plasma cutting machines, are ongoing to enhance efficiency.

Strategic Partnerships and Indigenization Drive

To address capacity constraints and pursue larger projects, GRSE has formed strategic partnerships. An MoU with Swan Defence targets bidding and executing large commercial vessels (>250m), with an order expected in the next financial year. A consortium agreement with Hindustan Shipyard (HSL) enables GRSE to bid for the LPD project, leveraging HSL's infrastructure. The company maintains a strong focus on indigenization, achieving over 85% indigenous content in completed projects and actively participating in government schemes (Make-I, Make-II, Make-III) to further localize critical components like propulsion and weapon systems.

Project Execution Milestones and Future Revenue Outlook

GRSE has demonstrated strong project execution, delivering five major platforms in the first nine months of FY26 and planning to deliver three more in the next three months. The second P-17 Alpha ship is 93% complete and due for delivery in the next three months, while the third is on track for delivery this calendar year. The Next-Generation Corvette project is expected to commence revenue accrual from Q4 FY28, with equipment orders to be placed within six months of contract signing. Management projects FY27 to be a peak revenue year and aims to strategically manage projects and spares to avoid a revenue plateau in FY28.

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