Hopes of deeper Rolls-Royce ties drive Garden Reach shares up 4%

Shares of Garden Reach Shipbuilders and Engineers surged 4 percent on March 1 following an upbeat commentary from the company management. At 12:56pm, the shares were trading 3.5 percent higher at Rs 426.35 on the BSE.

PR Hari, Chairman and Managing Director of Garden Reach Shipbuilders and Engineers, told CNBC-TV18 that the company has expanded the scope of its existing partnership with the partnership with British luxury car and aero engine maker Rolls Royce.

He sees an opportunity of more than 100 engines from the partnership with Rolls-Royce.

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Hari added that the current orderbook of Garden Reach Shipbuilders and Engineers is at Rs 22,240 crore and hopes to conclude order of Rs 3,400 crore by this fiscal year.

Out of the total order book, Rs 21,800 crore is from shipbuilding, and rest for ship repair, engines, engineering division and bailey bridges, Elara Securities said.

The orderbook is expected to be executed by FY27 and peak revenue is likely to be earned in FY25, the brokerage firm said.

ICICI Securities believes that the current share price factors in most of the concerns pertaining to earnings peaking out by FY25 and lack of firm orders beyond the current orderbook. “That said, we believe there are many opportunities in the pipeline in the medium term,” it added.

The domestic brokerage firm kept a target price of Rs 385 and had upgraded the stock rating to ‘reduce’ from ‘sell’. “We will keep a close tab on the incremental orders, which are key to the future earnings trajectory,” ICICI Securities said.