Garden Reach Shipbuilders Q1 Results: Revenue growth strong at 38% but higher costs impact margins

Shares of Garden Reach Shipbuilders & Engineers (GRSE) gained after the company reported a strong set of earnings for the quarter ended June, with consolidated net profit rising nearly 44% year-on-year, although operating margin narrowed marginally. The stock cooled off soon after.

The state-run defence shipbuilder's net profit increased 43.8% to ₹172.8 crore during the quarter from ₹120.2 crore a year earlier. Revenue from operations rose 38.5% to ₹1,814.6 crore from ₹1,309.9 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 33.3% to ₹149.2 crore from ₹111.9 crore. EBITDA margin, however, slipped to 8.2% from 8.5% in the corresponding quarter last year.

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Total income for the quarter increased to ₹1,914.2 crore from ₹1,382.4 crore a year ago, while profit before tax rose 38.9% to ₹231.5 crore from ₹166.7 crore. Earnings per share improved to ₹15.09 from ₹10.49 in the year-ago period.

The company reported higher spending on raw materials during the quarter, with the cost of materials consumed rising to ₹1,244.2 crore from ₹679.9 crore a year earlier.

Purchases of products for resale also increased to ₹128.1 crore from ₹72 crore, while subcontracting charges declined to ₹81.5 crore from ₹235.6 crore. Total expenses rose to ₹1,682.7 crore from ₹1,215.7 crore in the corresponding quarter last year.

GRSE's balance sheet remained strong, with the debt-equity ratio at 0.014 times as of June-end, compared with 0.012 times a year ago. Net worth increased to ₹2,799.7 crore from ₹2,198.8 crore, while the current ratio improved to 1.32 times from 1.18 times. Net profit margin also expanded to 9.52% from 9.17% a year earlier.



Shares of Garden Reach Shipbuilders are trading 0.2% higher after the results announcement, at ₹2,616.8. The stock is up 7% so far this year.

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