900% Returns, Rs 1.44/Share Dividend: Multibagger Midcap Defence PSU Stock Hits Record High On Results

The shares of Garden Reach Shipbuilders Ltd (GRSE), the state-run shipbuilding company, surged by 17% on Thursday, reaching a record high of Rs 1,368 following the announcement of its strong March quarter results. The stock's significant rise reflects the market's enthusiastic response to the company's financial performance and optimistic outlook.

For the March quarter, Garden Reach Shipbuilders reported a revenue of over Rs 1,000 crore, marking a 69% increase compared to the same period last year. This revenue growth propelled the company's Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) to Rs 90.5 crore, more than tripling the Rs 20 crore reported in the previous year. Net profit for the quarter also doubled to Rs 112 crore.

The management stated that both revenue and profit figures were the highest in the company's history. They expressed confidence in sustaining this growth momentum in the coming years, attributing their success to strategic initiatives and strong project execution.

While Garden Reach Shipbuilders did not disclose the exact size of its order book, it reassured stakeholders that it remains "strong" with several ongoing projects in their maximum revenue recognition phase. The company also hinted at the potential for additional orders, which would further boost its growth.

For the entire financial year 2024, the company's revenue saw an increase of 40%, and net profit grew by 57% compared to the previous financial year. These figures show the company's consistent performance and its strategic importance in India's defence sector.

In a filing with the Bombay Stock Exchange (BSE) dated May 22, Garden Reach Shipbuilders announced that its Board of Directors recommended a final dividend of Rs 1.44 per equity share. This is in addition to the interim dividend of Rs 0.92 per equity share already paid for the financial year 2023-24. The final dividend is subject to shareholder approval at the upcoming 108th Annual General Meeting (AGM) and will be paid within 30 days of its declaration.

Garden Reach Shipbuilders' shares have shown strong performance over various time frames. Over the last month, the stock soared 37%, and in the past six months, it gained 48%. The stock's two-year rally stands at 284%, while over three and five years, it has jumped 542% and 910%, respectively.

With Thursday's surge, the company's market capitalisation crossed Rs 15,000 crore, extending its gains for 2024 to nearly 60%. Over the past 12 months, the stock has nearly tripled in value, gaining in five out of the last six trading sessions. As of 1:25 pm on Thursday, the shares were trading at Rs 1,384.80 per share on the National Stock Exchange (NSE), up more than 16% for the day.

On the technical front, the Relative Strength Index (RSI) of Garden Reach Shipbuilders has crossed 80, indicating that the stock is in "overbought" territory. This suggests that the stock has been in high demand, though it also raises caution among technical analysts about a potential pullback. Out of the four analysts covering Garden Reach, the sentiment is mixed, with two analysts giving a "buy" rating and the other two recommending a "sell."

Garden Reach Shipbuilders & Engineers Ltd., a warship building company in India, has a history dating back to 1884 when it began as a small workshop repairing vessels for the River Steam Navigation Company. The company was taken over by the Government of India in 1960 and has since been under the administrative control of the Ministry of Defence. It holds the distinction of being the first shipyard in independent India to build a warship for the Indian Navy, the Seaward Defence Boat (SDB) INS Ajay, in 1961.