Garden Reach Shipbuilders & Engineers Q4 FY26 earnings call

Garden Reach Shipbuilders & Engineers Ltd. reported its best-ever financial performance in Q4 and FY26. For the full financial year 2026, revenue from operations grew by 38% to ₹7,002 crore, while profit after tax (PAT) increased by 42% to ₹748 crore. In Q4 FY26 alone, revenue from operations was ₹2,119 crore, a 29% increase year-on-year, and PAT rose by 24% to ₹303 crore. The company also saw its EBITDA margin improve to 11.6% in FY26 from 8.3% in FY25.

The strong financial results were underpinned by robust physical performance. In FY26, GRSE delivered eight warships to the Indian Navy, including three on the same day, a first in the country's history. The company also launched one warship and performed keel laying for 19 platforms, including 13 hybrid ferries for the Government of West Bengal. Beyond shipbuilding, GRSE delivered seven naval surface guns and 110 portable steel bridges, with 30 bridges exported, contributing over ₹200 crore to this vertical and over ₹270 crore from exports.

GRSE's current order book stands at ₹15,324.13 crore as of March 31, 2026. Approximately 96% of this, or ₹14,730 crore, is from shipbuilding. Key projects include ₹5,868 crore remaining for the P-17 Alpha project, ₹2,035 crore for Anti-Submarine Shallow Water Craft, and ₹5,168 crore for Next Generation Offshore Patrol Vessels. The company noted that the order book dropping below ₹20,000 crore for the first time in five years indicates an improved execution rate. One P-17 Alpha ship is 74% complete and expected for delivery this calendar year. Four Anti-Submarine Shallow Water Craft are nearing completion, with two at 80% physical progress and expected by mid-calendar year, and the remaining two at 60% progress for delivery within the current financial year.

The company has a substantial pipeline of potential orders. GRSE is the L1 bidder for the Next Generation Corvette (NGC) project, valued at approximately ₹33,000 crore, with contract signing expected in the current quarter (June). Additionally, tenders are live for two Multipurpose Vessels (₹1,500 crore), five Next Generation Offshore Patrol Vessels for the Indian Coast Guard (₹2,000 crore), and 22 Interceptor Boats (₹1,000 crore). RFPs are expected in the next three months for 120 Fast Interceptor Craft (₹3,500 crore), 31 Follow-On Water Jet FAC (₹3,500 crore), and seven P-17 Bravo ships (₹70,000 crore). Further projects with AoN status, including 12 Mine Countermeasure Vessels (₹32,000 crore) and four Landing Platform Docks (₹35,000 crore), are expected to see RFPs later in the current financial year. The total estimated order value for projects with AoN is approximately ₹1,50,000 crore, excluding the NGC project.

GRSE is actively pursuing capacity expansion, aiming to increase its shipbuilding capacity from 28 to 32 platforms by the end of the calendar year through modernization projects. The company is also establishing two Brownfield and two Greenfield shipbuilding facilities (one in Gujarat, three in West Bengal). Management highlighted growing opportunities in the export market, particularly from European clients, due to competitive Indian pricing and quality. GRSE intends to pursue higher-margin commercial shipbuilding projects, while emphasizing that warship building remains the primary driver of profitability.

While the NGC contract signing is anticipated in the current quarter, revenue recognition from this project is expected to commence in the second half of FY28, with the major chunk of revenue starting from FY29 due to the S-curve nature of shipbuilding projects. For the current financial year (FY27), management expects revenue accrual to be 'very healthy' and in line with recent years. The company aims to maintain similar EBITDA margins in FY28 and FY29 as seen in FY26 (11.6%), supported by the completion of existing projects and the gradual revenue contribution from NGC and other new orders.