Summary
Garden Reach Shipbuilders & Engineers Limited - Q3 FY26 Earnings Call Summary Thursday, 12 February 2026, 04:30 PM
Event Participants
Executives 3 Cmde P. R. Hari, IN (Retd) - Chairman & Managing Director, Shri Niranjan Mukund Bhalerao - Director (Finance) and CFO, Shri Sandeep Mahapatra - Company Secretary
Analysts 10 Amit Anwani, Ashok Shah, Dipen Vakil, Divyesh Shah, Harshit Kapadia, Hitesh Chaudhari, Hardik Rawat, Krishna Doshi, Namit Arora, Sunil Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹1,896 crores | +49% YoY; Strong physical execution with 5 ships delivered in 9M FY26. |
| Profit After Tax (PAT) | ₹171 crores | +74% YoY; Driven by higher operating leverage and efficient project execution. |
| 9M FY26 Revenue | ₹4,883 crores | Nearing full FY25 revenue (₹5,076 cr) in just nine months. |
| Order Book | ₹18,482 crores | -7.6% QoQ; Execution rate picking up; includes 10 projects and 42 platforms. |
| Order Book Mix (Defense) | ₹14,276 crores | Represents 77% of total order book; P-17 Alpha is the largest component at 46%. |
| Order Book Mix (Non-Defense) | ₹3,309 crores | ~18% of book; Includes research vessels and export projects. |
| Manufacturing Capacity | 28 platforms | Increased from 24; targeting 32-35 concurrently by end of CY 2026. |
Geographic & Segment Commentary
- Kolkata (West Bengal): Remained the core hub with three new brownfield sites acquired from Syama Prasad Mookerjee Port. Two sites are undergoing modernization for production readiness by end-CY2026, while the third is in the DPR stage.
- Gujarat Expansion: Finalized two sites—one in Kandla (partnering a government entity) and one in Bhavnagar (private entity partnership). These facilities are targeted for large-size platforms (VLGCs) and are expected to be production-ready within 3-5 years.
- International (Europe/Bangladesh): Currently executing a 12-ship multipurpose vessel order for a German client and a dredger for Bangladesh. Management noted high demand from European countries (Germany, Sweden, Norway) shifting away from Chinese shipyards.
Company-Specific & Strategic Commentary
- Project Wins & L1 Status: Declared L1 for the Next Generation Corvette (NGC) project for 5 ships valued at ~₹33,000 crores. Contract signing is expected by March 2026, boosting the year-end order book to ~₹50,000 crores.
- Strategic Partnerships: Signed a consortium agreement with Hindustan Shipyard (HSL) to bid for the Landing Platform Dock (LPD) project (₹35,000 crores) and partnered with Swan Defence for large commercial vessel opportunities.
- Product Diversification: Successfully indigenized 30mm Naval Surface Guns with 60% local content. Currently executing 17 guns for the Navy with a potential pipeline of 49 more for the Coast Guard.
- PPP Model: Leveraged private shipyards to offset capacity constraints; 5 of 7 outsourced platforms have been successfully completed under this model.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Order Book | ~₹50,000 cr by Mar '26 | Inclusion of NGC project (₹33,000 cr) and other smaller wins. |
| Order Book | ~₹70,000 cr by FY27 | Assumes winning a portion of P-17 Bravo (₹70k cr total project value). |
| Revenue Growth | 25% to 30% CAGR | Driven by peak execution of P-17 Alpha and upcoming NGC stages. |
| FY27 Performance | Peak Revenue Year | Coincides with the delivery of the final P-17 Alpha Frigate and major milestones. |
Risks & Constraints
| Risk | Context |
|---|---|
| Capacity Constraints | Current facilities cannot handle vessels >250m; mitigated by Gujarat expansion and HSL/Swan partnerships. |
| Execution Plateau (FY28) | Risk of revenue dip post P-17 Alpha completion; management plans to mitigate via spare parts revenue and accelerating NGC stages. |
| Competitive Bidding | Shift from nomination to competitive bidding increases margin pressure; however, GRSE maintains an edge in P-17 Bravo due to existing design familiarity. |
Q&A Highlights
Next Generation Corvette (NGC) Timing
- Question: When will revenue accrual start for the ₹33,000 cr NGC project? (Hitesh Chaudhari)
- Answer: Contract signing is expected by March 2026. Revenue accrual typically starts after a 2-year pre-production/design phase, specifically in Q4 FY28. (Cmde P. R. Hari)
P-17 Bravo Project
- Question: What is the status of the P-17 Bravo (7-ship) project? (Hitesh Chaudhari)
- Answer: AON is accorded. RFP is expected in April 2026. Contract signing targeted for Feb-March 2027. GRSE has a competitive edge as the current P-17 Alpha builder. (Cmde P. R. Hari)
Margin Sustainability
- Question: Will the NGC order compromise margins since it was competitively bid? (Harshit Kapadia)
- Answer: While NGC is competitive versus the nominated P-17 Alpha, margins have not been compromised and will remain “healthy” and “similar” to current levels. (Cmde P. R. Hari)
Infrastructure & Technology
- Question: Where will technology for complex vessels like LPD or VLGC come from? (Harshit Kapadia)
- Answer: GRSE will collaborate with proven foreign design partners (e.g., Koreans for VLGC) for the first project, then internalize the competency for subsequent orders. (Cmde P. R. Hari)
Key Takeaway
GRSE reported a robust Q3 FY26 with 49% revenue growth and 74% PAT growth, driven by an accelerated delivery cycle of one ship every two months. The company is at a strategic inflection point, transitioning from a ₹18,482 crore order book to a projected ₹50,000 crore by year-end following the L1 win for the ₹33,000 crore Next Generation Corvette (NGC) project. While FY27 is guided as a peak revenue year due to the P-17 Alpha project lifecycle, the company is aggressively expanding its geographic footprint into Gujarat and adopting a PPP model to handle a ₹2.5 lakh crore sector pipeline. Key watch points remain the timing of the ₹70,000 crore P-17 Bravo RFP and the successful mitigation of a potential execution plateau in FY28 through ship repairs and spare parts revenue. Management remains confident in maintaining a 25-30% CAGR while expanding into the high-margin commercial and export markets.
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