GRSE: Despite 100% rally, this multibagger defence PSU can rally 28% further; here's why

Defence stock: After a rally of over 100 per cent from its 52-week low of Rs 1,180.10 in March, retail favourite defence PSU stock Garden Reach Shipbuilders & Engineers Ltd (GRSE) on Wednesday received a revised target price from Antique Stock Broking, still hinting at 28 per cent potential upside. Strong order book, healthy order pipeline, robust near-term earnings growth, industry tailwinds, and a strong balance sheet are some of the positives for GRSE, Antique said on the multibagger stock.  

Public holding in this defence PSU stood at 25.50 per cent at the end of June quarter. Out of this, a significant 14.89 per cent stake was held by 3.97 lakh individuals with up to Rs 2 lakh worth shares. 

Antique said it has made minor downward revision to its earnings estimates but retained 'Buy' rating with a target price of Rs 3,047 against Rs 3,194 earlier, valuing the stock at 42 times H11FY28 core earnings. On Wednesday, the scrip was trading at Rs 2,383.50 apiece, up 1.26 per cent.

"We remain positive on the stock given its large order book and pipeline, and government's focus on developing the shipbuilding sector," it said.
 
At present, GRSE's present order book stands at approximately Rs 21700 crore with major projects on track to be executed in the next 3-4 years. It comprises of two P17A stealth frigates (scheduled for delivery in FY26/ 27), anti-submarine warfare shallow water crafts, a survey vessel, and next-generation offshore patrol vessels. 

Antique noted that GRSE is L1 for a next-generation corvette order valued at Rs 25,000 crore-plus. This order is now at the contract negotiation stage and should be finalised in 2HFY26. 

"This order will more than double the company's existing order book," it said.

Antique said GRSE has upgraded its existing infrastructure to build 28 vessels from 24 vessels in FY24. These enhancements are expected to significantly boost production capabilities, enabling it to reduce delivery time, bid for larger orders, and also improve productivity. 

In investor interactions, the management indicated that they are having to decline some orders due to capacity constraints. In view of the large growth potential in shipbuilding and constraints on capacity at its existing location in Kolkata, GRSE is in active discussions with various state governments to explore the creation of a greenfield shipyard as part of India's proposed maritime cluster development strategy, Antique said.

With sustained focus and thrust towards meeting delivery timelines, Antique expects FY26 and FY27 to be strong years for the company's revenue growth. 
The brokerage said GRSE could be a strong contender for 12 MCM order, valued at an estimated Rs 44000 crore and cited signed agreements with private shipyards, both on the Western and Eastern seaboards, giving it presence in future commercial shipbuilding possibilities.