Garden Reach Shipbuilders & Engineers (GRSE)

Garden Reach Shipbuilders & Engineers (GRSE) is one of India’s oldest and most versatile defence shipyards, with a track record of 785+ vessels delivered across warships, research vessels, auxiliaries and exports. Established in 1884 and nationalized in 1960, GRSE has transformed from a colonial-era workshop into a full-spectrum naval shipbuilder capable of constructing stealth frigates, ASW corvettes, survey vessels, offshore patrol vessels and fast attack craft.

The company operates a multi-yard, modular production system along the Hooghly River in Kolkata, supported by modern fabrication, outfitting and integration infrastructure. This setup enables GRSE to manage multiple parallel programmes with improving delivery timelines. As of September 2025, GRSE’s order book stands at Rs 202 billion, providing four to five years of revenue visibility across defence, non-defence and export segments.

GRSE occupies a differentiated position within India’s defence shipbuilding ecosystem. It has broad-based platform capability across defence and non-defence vessels, strong execution credentials in serial production programmes, growing export exposure through international collaborations, and a balanced order book that limits concentration risk.

Business Overview

GRSE is a leading defence public sector shipyard under the Ministry of Defence. Headquartered in Kolkata, it has developed into a versatile shipbuilder with capabilities spanning warships, patrol vessels, research vessels, auxiliary platforms and export ships. Over its long operating history, GRSE has delivered 790+ vessels, including 110+ warships, to the Indian Navy, Indian Coast Guard and friendly foreign nations.

GRSE has been an integral part of India’s naval shipbuilding journey, with progressive capability enhancement over time. In the pre-2000s period, it constructed patrol vessels, landing craft and auxiliary ships. During 2000s-2010s, GRSE entered into missile corvettes and complex surface combatants. In recent years, execution has expanded to advanced programmes such as stealth frigates, ASW corvettes, survey vessels and next-gen patrol platforms, alongside a growing export footprint.

Business Segments

Shipbuilding (88% of FY25 Revenue)

GRSE’s primary segment covers construction of warships, patrol vessels, survey and research ships, export MPVs and ferries. This segment contributes roughly 88% of revenue and drives long-cycle execution visibility. The portfolio includes advanced naval warships (P-17A frigates, ASW-SWC, NGOPVs), survey and research vessels, multipurpose export vessels, ferries and fast attack craft. GRSE has strong in-house design capability and modular shipbuilding processes across its yards, enabling concurrent construction of complex platforms.

Ship Repair and Refit (8% of FY25 Revenue)

The ship-repair division delivers high-margin refits and mid-life upgrades for the Indian Navy and Coast Guard. This is a higher-margin, short-cycle business that has scaled rapidly from Rs 377 million in FY21 to Rs 3.9 billion in FY25. GRSE has modernized dry-docking and repair facilities at the Rajabagan Dockyard to expand capacity and shorten turnaround times.

Engineering Division (3% of FY25 Revenue)

This division manufactures Bailey bridges, deck machinery and weapon handling systems, davits, pumps and auxiliary equipment. Bailey bridges are supplied to the Indian Army, Border Roads Organisation and state agencies, providing a steady annuity-like revenue stream. The division offers steady recurring revenue and supports both internal shipbuilding needs and external defence and civil customers.

Marine Diesel Engine Division (1% of FY25 Revenue)

GRSE operates a dedicated engine production and overhaul facility in Ranchi, manufacturing medium-speed diesel engines under technology partnerships. The division provides propulsion engines, gensets and overhaul services for naval and commercial vessels. Revenue has scaled significantly, doubling in FY25, driven by higher integration in GRSE-built ships and growing focus on indigenization.

Segmental Revenue Mix (FY25)

Segment	Revenue (Rs mn)	% of Total
Shipbuilding	44,500	88%
Ship Repair	3,900	8%
General Engineering	1,500	3%
Diesel Engine	824	1%

Product Portfolio

Platform	Description
Frigates	Large multi-role warships equipped for long-range anti-air, anti-surface and anti-submarine missions
Corvettes	Compact surface combatants for coastal ASW, anti-ship and limited anti-air operations
Offshore Patrol Vessels	Long-endurance patrol ships for EEZ surveillance, interdiction, anti-piracy and maritime security
ASW Shallow Water Craft	Shallow-water anti-submarine vessels with sonar, lightweight weapons and coastal defence capability
Fast Attack Craft	High-speed armed craft for quick-response patrol and coastal security missions
Survey Vessels (Large)	Hydrographic platforms for seabed mapping, navigation charting and oceanographic surveys
Research Vessels	Specialized ships fitted with laboratories and scientific sensors for ocean, acoustic and coastal research
Multipurpose Vessels	Versatile export vessels for cargo, patrol, research or auxiliary roles with configurable modules
Electric/Hybrid Ferries	Zero-emission or hybrid-powered ferries for short-distance passenger and vehicle transport
Landing Ship Tank	Designed for amphibious landings, transporting troops, vehicles and equipment to shore

Production and Infrastructure Footprint

GRSE operates a multi-yard shipbuilding complex along the Hooghly River, supported by modern fabrication, outfitting and integration infrastructure that enables parallel execution across multiple vessel classes. The shipyard’s modular facilities, heavy-lift cranes, dry-docking capability and digital production systems support roughly 28 concurrent builds currently, with capacity scaling to approximately 32 ships by 2026 and further expansion planned over the longer term.

Yard/Unit	Core Capabilities
Main Yard (Garden Reach)	Modular construction, large warships, research vessels, outfitting and integration
Rajabagan Dockyard	Medium vessels, block fabrication, outfitting of OPVs and auxiliary craft
Fast-Craft Unit	High-speed craft, FPVs, FACs, interceptor boats, ferries
Ranchi Engine Plant	Diesel engine assembly and overhaul, propulsion integration
Bailey Bridge Unit	Modular military bridges, engineering fabrication
Deck Machinery & Pumps	Winches, capstans, pumps and naval auxiliary systems
Module Block Export Facility	Prefabricated hull blocks for export programmes

GRSE’s MoU with Swan Defence & Heavy Industries provides incremental execution flexibility for large platforms such as Landing Platform Docks (LPDs). The company is implementing a structured expansion programme that includes brownfield upgrades across three pockets in West Bengal and a new greenfield shipyard on India’s West Coast. These initiatives, phased over the next four years, are expected to raise capacity from 32 vessels in 2026 to roughly 40 vessels per annum.

Concurrent Production Capacity Evolution

Year	Vessels Capacity
2024	24 vessels
2025	28 vessels
2026	32 vessels
2040 (Target)	40 vessels

Order Book Analysis

GRSE enters FY26 with one of the strongest order books in its history. As of September 2025, the order book stands at Rs 202 billion, providing around five years of revenue visibility. The order book mix has become more balanced, with defence shipbuilding still forming the core but with a consistently rising share of exports and non-defence vessels.

The order book has remained resilient and broadly stable in the Rs 220-240 billion range over the last three years, despite substantial execution progress on complex, long-cycle programmes such as the P-17A frigates, ASW-SWC and Survey Vessels (Large). The current composition is well-distributed across ongoing naval programmes (40-45%), export projects (15-20%), research vessels (7-10%), patrol vessels and ferries (5-10%), and engineering/support businesses.

Current Order Book (September 2025)

Programme	Qty	Project Value (Rs mn)	Order Book (Rs mn)	Status
P-17A Frigates	3	192,930	95,000	1 delivered, 2nd in sea trials, 3rd at 60% completion
ASW Shallow Water Craft	8	63,113	30,750	2 delivered, 3rd delivering Dec 2025, rest 65-80% complete
Survey Vessels (Large)	4	24,352	4,000	3 delivered, 4th at 85% completion
Next-Gen OPVs (NGOPVs)	4	35,560	32,500	Ships 1-2 at 60%+, Ships 3-4 at 52%
Hybrid Ferries (WB Govt.)	13	2,262	2,200	Under construction, deliveries from early 2026
Oceanographic Research Vessel	1	8,400	7,500	Construction progressing, delivery FY28
Acoustic Research Vessel	1	4,900	2,200	Under construction, delivery FY28
Coastal Research Vessels (GSI)	2	4,910	4,600	Fabrication underway, deliveries FY28
30mm Naval Surface Guns	10	2,485	1,500	4 delivered, 3 installed, 6 remaining
MPVs (Germany Export)	8	9,460	8,260	1 completed, staggered deliveries through 2029
Hybrid MPV (Germany Export)	4	5,370	5,370	Recently awarded, construction begins FY26
Dredger (Bangladesh Export)	1	1,428	950	Fabrication ongoing, delivery mid-2027
Ship Repair & AMC	-	-	2,105	-
Engineering Division	-	-	1,118	-
Engine Division	-	-	273	-
TOTAL ORDER BOOK	-	-	202,056	-

Order Pipeline and Growth Catalysts

GRSE’s opportunity pipeline is now exceptionally broad and sizeable, spanning near-term requests for proposal (RFPs), large-scale medium-term programmes and a growing exports footprint. In the immediate horizon, GRSE is the lowest bidder (L1) for the Next-Generation Corvette programme (NGC), with contract finalization anticipated in FY26. This is a potential landmark win valued at approximately Rs 250 billion.

In the near-term, GRSE is actively bidding for over Rs 87 billion of projects expected to be awarded in FY26-27. These include 18 special purpose vessels for the Indian Coast Guard, five next-generation survey vessels and two multipurpose vessels for the Indian Navy. Additionally, GRSE has a commanding position across seven AoN-sanctioned mega programmes totalling more than Rs 1.5 trillion. These include P-17 Bravo frigates, Mine Countermeasure Vessels, Landing Platform Docks and other large vessel classes.

The exports and commercial shipbuilding funnel adds further depth. A follow-on MPV order for Germany is expected in FY26/27, and a pipeline of roughly Rs 20-30 billion in European/ASEAN markets over FY27-29 exists. In parallel, GRSE is positioned for a Rs 50-75 billion opportunity in domestic PSU commercial vessels over FY26-30. Together, this pipeline of Rs 1.7-1.8 trillion positions GRSE extremely well to scale its order book and revenue base over the next five years.

Key Awards Anticipated Over Next 2-3 Years

Programme	Qty	Est. Value (Rs bn)	Expected Timing
Nearing Contract Finalization
Next Generation Corvette	5	250	FY26
RFP Issued
Special Purpose Vessel	18	30	FY27
Next Generation Survey Vessel	5	35	FY27
Multipurpose Vessel	2	22	FY27
AoN Granted
Fast Interceptor Craft	120	30	FY27
Fast Interceptor Boats	18	20	FY27
Waterjet Fast Attack Crafts	31	35	FY27
Next Gen OPV (Additional)	5	50	FY28
P-17 Bravo Frigate	7	700	FY28
Mine Countermeasure Vessel	12	320	FY28
Landing Platform Docks	4	350	FY29

Research, Development and Innovation

GRSE has significantly strengthened its R&D and innovation ecosystem, with FY25 seeing notable progress across autonomous platforms, indigenous weapon systems, green-energy vessels and digital shipyard technologies. Innovation remains a core pillar of GRSE’s strategy, reflected in its expanding partnerships with academia, start-ups and technology firms. R&D spending has grown from Rs 6 million in FY19 to Rs 294 million in FY25, representing roughly 1% of sales.

Autonomous and Underwater Systems

GRSE is advancing a strong autonomous systems portfolio with upgrades to the Unmanned Surface Vessel (USV) Swadheen, Autonomous Underwater Vessel (AUV) Neerakshi V2, and next-gen platforms under Make-I/II including Autonomous Surface Vessel for Mine Countermeasure (ASV-MCM) and Extra-Large Autonomous Underwater Vehicle (XLAUV). These developments strengthen GRSE’s capability in unmanned maritime solutions for future naval requirements.

Green and Sustainable Maritime Technologies

GRSE is emerging as an early mover in green shipbuilding through India’s first 150-passenger fully electric ferry and an AIP-cleared hydrogen fuel-cell ferry. These initiatives position the company well to address the growing demand for low-emission defence and commercial vessels.

Digital Shipyard (Shipyard 4.0)

GRSE has made substantial progress in its Shipyard 4.0 programme, completing six AI-driven automation initiatives and progressing three more. Key technologies include robotic welding and painting, AI-based weld defect detection and digital inspection systems, enhancing productivity and quality.

Indigenization Progress

GRSE continues to make strong strides in indigenization, driven by in-house design capability, localization of critical subsystems and active participation in government programmes such as the Positive Indigenization Lists (PILs) and SRIJAN portal. In FY25, the company achieved over 90% indigenous equipment fit on the ASW Shallow Water Craft, 87% on Survey Vessel (Large) and roughly 80% on P-17A frigates, reflecting deep localization across hulls, propulsion, auxiliary machinery and combat systems.

Project/Platform	Indigenous Content	Major Systems Indigenised
Project 17A (Nilgiri-class)	75-80%	Hull, superstructure, gearboxes, deck machinery, communication suites
ASW Shallow Water Craft	90%+	Hull, propulsion, auxiliary systems, IPMS
Survey Vessels (Large)	87%	Hull, acoustic sensors, positioning and mapping systems, auxiliaries
Next-Gen OPVs	80%	Engines, steering gear, hydraulic systems, electrical systems
Next-Gen Corvette	85%+ (Target)	Propulsion, combat suite, EW systems, IPMS
P-17 Bravo Frigates	85%+ (Target)	Integrated mast, CMS, propulsion gearboxes, auxiliaries

Under the MoD’s indigenization framework, GRSE has indigenised 30 out of 41 PIL-listed items. The 30mm Naval Surface Gun, developed with 60% indigenous content under the Buy (India) category, successfully completed sea acceptance trials in FY25, establishing a new weapon vertical for GRSE and enabling follow-on Make-II orders for 97 additional systems.

Strategic Collaborations and MoUs

GRSE has ramped up its collaborative outreach in recent years, signing several strategic Memoranda of Understanding (MoUs) with global and domestic partners to bolster its technological depth, export readiness and indigenization ambitions. These partnerships reflect GRSE’s evolving strategy to move beyond higher-volume shipbuilding into specialized systems, dual-use vessels and export markets.

• SWAN Defence (April 2025): MoU to co-develop commercial and dual-use shipbuilding capacity in India, emphasizing modular fabrication for export markets
• Reintjes GmbH (August 2025): Technical collaboration with German firm to integrate advanced marine propulsion gearboxes into GRSE-built vessels for defence and commercial applications
• India Maritime Week 2025: Cluster of MoUs with Deendayal Port Authority, Syama Prasad Mookerjee Port Authority, IPRCL, Shipping Corporation of India and Modest Infrastructure focusing on propulsion systems, green-shipping solutions and export block-fabrication
• Apollo Micro Systems (January 2025): Five-year strategic MoU to jointly develop and co-produce advanced defence technologies including underwater weapons, autonomous underwater vehicles, naval mines and defence electronics
• Centum Electronics (October 2025): Collaboration to jointly design, manufacture, integrate and upgrade advanced naval navigation and electronic systems

Management Team

Name	Designation	Profile
Cmde PR Hari, IN (Retd.)	CMD	CMD since June 2022, 36+ years in Indian Navy across operations, strategy and technical leadership
Cdr. Shantanu Bose, IN (Retd.)	Director (Shipbuilding)	Director since June 2022, 23 years of Indian Navy experience, naval architect by training
Capt. P. Sunilkumar (Retd.)	Director (Corporate Planning)	Director since July 2025, 22 years of Indian Navy experience, mechanical engineer
Smt. Aparajita Ghosh	CGM (Finance)	CGM since November 2025, 30+ years experience, CA and Cost Accountant

Financial Analysis

GRSE has delivered a strong financial performance over FY21-25, driven by accelerated execution of major naval programmes, scaling contribution from export MPVs and improved utilization of its modular shipbuilding infrastructure. Revenue grew from Rs 11.4 billion in FY21 to Rs 50.8 billion in FY25, representing a 45% CAGR over this period.

EBITDA increased from Rs 721 million in FY21 to Rs 4.2 billion in FY25, with margins expanding from 6.3% to 8.3% over the same period. This margin improvement was supported by better absorption of overheads, deliveries of high-value contracts and rising exports mix. PAT rose from Rs 1.7 billion in FY21 to Rs 5.3 billion in FY25, with PAT margins holding steady between 9-11%. Return ratios have strengthened sharply, with RoE improving from 16% in FY21 to 28% in FY25 and RoCE showing a similar trajectory.

Working Capital Analysis

GRSE consistently operates with deeply negative net working capital, supported by advances from the Navy/ICG and high contract-liability balances. FY25 net working capital stood at minus 156 days, compared to minus 475 to minus 982 days in FY21-23, reflecting faster normalization of inventory. Receivable days remain exceptionally low at 19-20 days, supported by milestone-based government payments. Inventory days have moderated from 416 days in FY23 to 255 days in FY25, driven by improved execution cycle and supply-chain predictability.

Key Risks

• Execution Delays in Major Naval Programmes: Slippages in procurement, trials or vendor deliveries across P-17A, ASW-SWC, NGOPV or NGC could defer revenue recognition and impact margins
• Dependence on Imported Propulsion and Electronic Systems: Disruptions or cost escalation in imported subsystems may delay shipbuilding schedules and compress margins under fixed-price contracts
• Pressure on Margins Due to Fixed-Price Contracts: A largely fixed-price order book exposes GRSE to inflation in steel, equipment and labour, potentially affecting profitability
• Challenges in Scaling New Capacity: Delays, cost overruns or slower ramp-up of the brownfield upgrades and West Coast greenfield yard may impact throughput, cost absorption and long-term return ratios

Peer Comparison

Company	Mkt Cap (Rs bn)	P/E FY26	P/E FY27	RoE FY26	RoE FY27
Mazagon Dock Shipbuilders	951	37.2x	36.2x	37.2%	30.1%
Cochin Shipyard	395	43.3x	36.5x	14.1%	14.9%
Garden Reach Shipbuilders	256	41.9x	30.2x	24.2%	26.6%

GRSE trades at a discount to Mazagon Dock on P/E but offers superior RoE compared to Cochin Shipyard. Among Indian defence shipyards, GRSE provides an attractive combination of diversified order book, strong execution track record and improving return ratios.

Investment Thesis

GRSE represents a compelling opportunity in India’s defence shipbuilding sector. The company’s strong execution track record, expanding capability set and multi-year revenue visibility from its deep order pipeline position it well for sustained growth. Current valuation reflects GRSE’s progress in transforming from a traditional shipyard to a full-spectrum naval solutions provider.

While earnings growth is expected to moderate from FY27 as several high-value programmes near completion and newer orders remain early in their execution cycles, improving margins, rising contribution from exports and ship repairs and sustained high return ratios suggest GRSE is transitioning to a structurally stronger earnings profile. The anticipated NGC award in FY26 could add significant upside to the current order book and earnings trajectory.

Key triggers to watch include: NGC contract finalization, P-17 Bravo programme progress, export order wins and capacity expansion milestones. Downside risks include execution delays, margin pressure from fixed-price contracts and slower-than-expected capacity ramp-up.