Mehabe score: 3 G Factor: 5 Piotski Score: 6 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 6.
Description
Garden Reach Shipbuilders & Engineers Ltd is a premier shipbuilding company in India under the administrative control of the Ministry of Defence, primarily catering to the shipbuilding requirements of the Indian Navy and the Indian Coast Guard. GRSE is a diversified, profit making and the first Shipyard in the country to export warships and deliver 100 warships to the Indian Navy and Indian Coast Guard.
Main Points
Shipbuilding Segment (94% of revenues)#
GRSE shipbuilding division consists of the construction of vessels for clients engaged in the defence sector shipping industry. Its build vessels i.e. Frigates, missile corvette, anti-submarine warfare corvette, survey vessel, offshore patrol vessel, etc.
In addition to the shipbuilding products mentioned above, over the years GRSE has also supplied various boats, pontoons, barge, sailing dinghy, fishing trawler, fire float, tug, dredger, passenger ferry, motor cutter, deck whaler, launch etc. to various other customers.
It owns 3 separate facilities for shipbuilding in close vicinity of each other in Koklata. The ships are build at the Main Works Unit and the Rajabagan Dockyard.Site:GRSEMain Symbol:GRSE
Stock trades at 187.0, below its 50dma 197.55 and below its 200dma 193.03. The stock remains bearish on technicals
The 52 week high is at 227.50 and the 52week low is at 166.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has been maintaining a healthy dividend payout of 53.25%
-Debtor days have improved from 83.73 to 56.99 days.
Weakness
– Contingent liabilities of Rs.4082.74 Cr.
-Earnings include an other income of Rs.166.85 Cr.
Competition
– The industry trades at a mean P/E of 9.6x. Garden Reach Sh. trades at the industry’s max P/E of 12.72x. GRSE trades at a P/E of 12.7x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 9.0. GRSE has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is -4.7%. The max 1- month return was given by Hariyana Ship: a return of 14.25 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 399.0 cr compared to Rs 457.0 cr for period ended Mar 2020, a fall of 12.7%
Operating Profits reported at Rs 38.0 cr for period ended Mar 2021 vis-vis 35.0 for period ended Mar 2020 .
Operating Margins expanded 186.5 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 5.06 compared to Rs 5.03 for previous quarter ended Dec 2020 and Rs 4.34 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1141.0 cr for period ended Mar 2021 vis-vis sales of Rs 1433.0 cr for the period ended Mar 2020, a fall of 25.6%. The 3 year sales cagr stood at -5.4%.
Operating margins expanded to 6.0% for period ended Mar 2021 vis-vis 3.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 153.0 cr for period ended Mar 2021 vis-vis sales of Rs 163.0 cr for the period ended Mar 2020, falling 6.5%.
Company recorded a healthy Net Profit CAGR of 18.5% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 14.0% over the last 3 Years. – The stock has given a return of -12% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is -20% vis-vis a compounded sales growth of -5% over the last 3 Years. – The compounded profit growth on a TTM basis is 0% vis-vis a compounded profit growth of 24% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.08% vis-vis 0.97% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 11.31% vis-vis 8.92% for Mar 2021
Conclusion
– is almost debt free.
– has been maintaining a healthy dividend payout of 53.25%
-Debtor days have improved from 83.73 to 56.99 days. – Contingent liabilities of Rs.4082.74 Cr.
-Earnings include an other income of Rs.166.85 Cr.
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains below its 50 DMA 197.55 and is trading at 187.0. Shows a near term lack of buying interest.
