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Defence PSU Stock to BUY: Garden Reach Shipbuilders & Engineers (GRSE) shares gained 3.6% to hit a day high of Rs 2,648.80 on Thursday after the defence PSU reported a strong September quarter performance.

The company’s standalone net profit rose 57.28% year-on-year to Rs 153.78 crore in Q2 FY26, compared with Rs 97.77 crore in the same quarter last year. Revenue from operations jumped 45.48% YoY to Rs 1,677.38 crore during the quarter ended 30 September 2025.

Profit before tax (PBT) surged 60.39% to Rs 209.36 crore as against Rs 130.53 crore a year ago. EBITDA grew 56% YoY to Rs 225 crore in Q2 FY26 from Rs 144 crore in Q2 FY25, driven by better project execution and cost efficiency.

Antique Stock Broking has maintained a ‘Buy’ rating on GRSE with a target price of Rs 3,047, valuing the stock at 42x its 1HFY28 earnings. The stock currently trades near Rs 2,589, while its 52-week high stands at Rs 3,535, recorded in June 2025, and its 52-week low at Rs 1,180, hit in March 2025.

The company’s current order book stands at around Rs 222 billion. It has emerged as L1 bidder for the next-generation corvette project worth Rs 250 billion, which is expected to be finalised in H2 FY26.

The order pipeline remains robust. GRSE management expects the Request for Proposal (RFP) for the P17B (Bravo) Frigates by December 2025. The project, valued at nearly Rs 700 billion, may be released in two phases. GRSE already holds orders for three P17A Frigates, making its chances strong for winning the upcoming P17B order.

Total expenses increased 40.04% YoY to Rs 1,536.71 crore in Q2 FY26. The cost of material consumed declined 16.02% to Rs 677.86 crore, while employee expenses rose 13.31% YoY to Rs 93.50 crore. Sub-contracting charges jumped 225.86% YoY to Rs 343.69 crore during the quarter.

On a half-year basis, GRSE reported a 48% YoY increase in profit after tax to Rs 274 crore in H1 FY26, compared with Rs 185 crore in H1 FY25. Revenue rose 38% YoY to Rs 2,987 crore, supported by robust execution and higher value orders.

Garden Reach Shipbuilders & Engineers is a leading shipbuilding company under the Ministry of Defence, primarily serving the Indian Navy and the Indian Coast Guard. It has played a key role in strengthening India’s maritime capabilities through advanced warship and vessel construction.

Abhay Shukla is a Senior Sub-Editor at Zee Business, where he covers the stock markets, corporate news, personal finance, technology, and auto sectors.

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