GRSE shares rise 42% in six sessions, what's powering the rally?

Shares of Garden Reach Shipbuilders and Engineers (GRSE) have gained 42% in six sessions. Of late, defence stocks have been on a run after Operation Sindoor showcased India's indigenous military prowess and PM Narendra Modi called for greater defence self-reliance.

GRSE stock, which closed at Rs 1771.35 on May 8, rose to a high of Rs 2,525 in the current session, rising 42% during the period. 

The defence firm also announced its Q4 and fiscal earnings recently which led to a rally in the multibagger stock. The earnings were announced after market hours on May 13. 

In the current session, GRSE stock zoomed 11.76% to Rs 2,525 on BSE. Market cap of the firm stood at Rs 28,552 crore. On BSE, around 8.23 lakh shares changed hands amounting to a turnover of Rs 201.17 crore.  

The multibagger stock climbed 151% in a year and rallied 797.64% in three years.

Om Mehra, Technical Research Analyst, SAMCO Securities is cautious on the outlook of the stock. 

"GRSE has delivered a decisive breakout above the Rs 2,050 resistance zone, marked by a wide bullish candle and strong volume, signaling a structural shift in trend. This move follows a prolonged consolidation phase, adding credibility to the breakout. Interestingly, the breakout has occurred near a previous gap zone from the earlier uptrend, with another unfilled gap left behind during the recent surge, now acting as key reference levels for further price action.

The stock is currently trading well above its key moving averages, with the RSI at 75 indicating strong momentum, albeit in the overbought territory. The MACD has confirmed a bullish crossover with expanding histogram bars, reinforcing short-term strength. Additionally, aligned support from the defence index, which has remained strong in recent weeks, lends further confirmation to the up move.

However, given the steep rally and stretched RSI, a cautious approach is warranted at current levels. Investors may consider re-entering or accumulating on pullbacks toward the Rs 2,150– Rs 2,180 zone, where previous resistance may now offer strong support. The broader trend remains positive, and if the structure holds, the stock could rally toward the Rs 2,450– Rs 2,525 zone in the near term," said Mehra.  

Antique Broking termed the Q4 earnings as exceptionally strong with the brokerage raising its estimates (EPS for FY26/ 27E by 12%/ 5%, respectively) at a core target P/E multiple of 43x FY27 earnings.

It said the firm has a strong order book with major projects on track to be executed in the next 3–4 years. 

"It comprises three P17A stealth frigates (all three are scheduled for delivery in FY26E/ 27E), eight anti-submarine warfare shallow water crafts, a survey vessel large project, and next-generation offshore patrol vessels. In 1QFY26, the company has won an INR 4.9 bn order for the construction of two coastal research vessels," said Antique.

Net profit surged by an impressive 118.9% year-on-year, reaching Rs 244.2 crore for the fourth quarter, compared to Rs 111.6 crore in the same period last year. Revenues from operations also saw a significant increase of 61.7% year-on-year, totaling Rs 1,642 crore, up from Rs 1,015.7 crore in the March 2024 quarter. EBITDA experienced remarkable growth, rising 141.8% to Rs 219 crore in Q4, compared to Rs 90.6 crore a year earlier.

For Q4FY25, earnings per share (EPS) stood at Rs 21.32, a notable increase from Rs 9.74 in Q4FY24.

In terms of overall performance for FY25, Profit After Tax (PAT) reached Rs 527 crore, marking a 48% growth from Rs 357 crore in FY24. The EPS for FY25 has climbed to Rs 46.04 from Rs 31.19 in the previous year.

Additionally, earnings before interest, tax, depreciation, and amortization (EBITDA) rose by 42%, totaling Rs 756 crore in FY25, up from Rs 534 crore in FY24.

Revenue from operations in FY25 increased by 41%, amounting to Rs 5,076 crore compared to Rs 3,593 crore in FY24.

The board recommended a final dividend of Rs 4.90 per equity share for FY25, subject to the approval of the shareholders. The final dividend will be paid within 30 days from the date of its declaration at the 109th AGM of the company.

Garden Reach Shipbuilders& Engineers is mainly engaged in the construction of warships.