Garden Reach is India’s leading shipyard engaged in constructing warships and patrol vessels for coast guard. Strong order book Rs. 26,200 crores (20+ years FY21 revenue) offers good earnings visibility. However, the orders have long gestation of 5 to 7 years and hence, revenues may increase in a more sedate manner with quarterly volatility depending on completion of vessels. We have an over weight rating due to cheap valuations, large order book position and steady inflow of new orders as defense spending increasing with focus on giving orders to domestic suppliers. Covid-19 has impacted the ship building activity, but with normalcy has returned and execution should pick up in the current fiscal – 24-08-2021 Price: 185.15 Rating: Over Weight Recommendation: Buy
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