Stock in Action - GRSE

Movement of the Day

Analysis

Price is trading ahead of short, Medium and the Long term moving averages.

Probable Rationale Behind Surge

1. Strategic Milestone in Indigenous Shipbuilding   

A. The delivery of INS Sandhayak stands as a significant milestone in India's indigenous shipbuilding industry.
B. Investors are responding positively to GRSE's successful execution, indicating confidence in the company's naval project capabilities.

2. Timely Completion and Symbolism

A. The timely delivery on Navy Day adds symbolic value to the achievement.
B. Investors appreciate GRSE's precision in adhering to
C. schedules, potentially boosting trust in the company's project management capabilities.

3. Reincarnation of INS Sandhayak   

A. The reincarnation of the vessel, sharing the name of a previously commissioned ship, highlights GRSE's historical contributions.
B. This continuity may instill confidence in investors regarding the company's reliability and endurance in the defense sector.

4. Versatile Capabilities and Strategic Significance  

A. GRSE's design and construction of the Sandhayak-class vessels contribute significantly to India's maritime strength.
B. Investors view the vessels' comprehensive survey capabilities and multi-role functionality as positive indicators of GRSE's role in fortifying the nation's defense capabilities.

5. Multi-Role Functionality and Market Potential    

A. The versatile nature of the Sandhayak-class vessels, with capabilities such as carrying helicopters and participating in low-intensity combat, positions GRSE for diverse defense applications.
B. Investors may see potential market opportunities in these multi-role capabilities, anticipating future contracts and revenue streams for GRSE.

Nov 23 Conference Call Analysis

I. Order Book Analysis

Current Order Book Status (as of September 30, 2023)
1. Stands at Rs. 23,739.59 crores.
2. Includes projects for the Indian Navy, Government of Bangladesh, and DRDO.

Ongoing Projects

P17 Alpha ships, Survey Vessel Large, Anti-submarine Shallow Water Craft, and Next Generation Ocean Going Patrol Vessels.

Upcoming Projects

Next Generation Survey Vessel, Next Generation Corvette, P17 Bravo ship, Next Generation Destroyer, and Waterjet Fast Attack Crafts.

Confidence in Future Orders    

1. Anticipation of increased orders, especially in exports and commercial ships segment.
2. Navy and Coast Guard expected to announce new projects.

Next Generation Destroyer (NGD) Project   

1. Expected order of 4+4 ships, with the first four to be completed before the next four.
2. Adequate capacity and capability.
3. Deliberation stage; RFP expected in latter half of the next calendar year.

Timeline for P17 Projects    

1. P17 Alpha project conclusion expected by FY27.
2. Ordering for P17 Bravo after completion of P17 Alpha.

Order Book Duration

1.Expected to last for the next five years.
2.Revenue recognition peak forecasted in FY25 or FY26.

II. Projects and Products

New Ventures   

1. Received Letter of Intent for an Oceanographic Resource Vessel for the Ministry of Earth Sciences.
2. Developed unmanned surface vessels, autonomous underwater vehicles, marine-capable drones, and green energy vessels.

Production Initiatives

Production of four next-generation ocean-going patrol vessels underway.
Aggressive pursuit of opportunities in autonomous platforms, green energy vessels, and commercial shipbuilding.

Repair Business Expansion   

1. Anticipated increase in ship repair business.
2. Ramping up ship repair vertical.

Market Potential    

1. Significant market potential for green ferries and vessels.
2. Opportunities in state governments and ports.

Technology Collaborations

Collaboration with Rolls Royce for high-speed low-power engines.

III. Financial Performance

Q2 FY24 Performance

Significant growth in revenue from operations and profit after tax.

Profitability Goals   

1. Aiming to maintain PAT margin above 7.5%.
2. Modest ship repair order book expected to increase.

Market Insights

Potential size of Kochi metro tender estimated at Rs. 150-180 crores.

IV. Capacity and Capability

Infrastructure Overview

1. Spare capacity in dry docks.
2. Partnerships with other shipyards to utilize spare capacity.
3. Adequate berth and dock capacity for concurrent and future orders.

V. Future Opportunities

Market Confidence

1. Confidence in receiving more orders, especially in exports and commercial ships segment.
2. Anticipation of new projects from Navy and Coast Guard.

Green Initiatives   

1. Significant market potential for green ferries and vessels.
    2. Aim to eliminate conventional powered platforms.