93.60% Dividend: Multibagger Defence PSU Company Garden Reach Shipbuilders Bags Rs 490 Cr Order; BUY?

Garden Reach Shipbuilders & Engineers Ltd (GRSE), a key player in India's shipbuilding sector, announced on Friday, October 18, that it has received a major contract from the Defence Research and Development Organisation (DRDO) for the design and construction of an Acoustic Research Ship (ARS). The contract, awarded by the Naval Physical & Oceanographic Laboratory (NPOL), is valued at approximately Rs 491 crore and will be a crucial addition to India's naval research capabilities.

GRSE confirmed the news through a filing with the stock exchange, stating that it had received a Letter of Intent from NPOL for the design, development, construction, integration of equipment, testing, certification, and commissioning of the Acoustic Research Ship. The project, aimed at boosting the Indian Navy's research infrastructure, is expected to be completed within 36 months from the contract signing.

The Acoustic Research Ship will play a pivotal role in enhancing the capabilities of the Indian Navy, aiding in the study of underwater acoustics, sonar performance, and other oceanographic research vital for the nation's defence.

October has been a busy month for GRSE, as the shipbuilder secured multiple contracts across different sectors. Earlier in the month, GRSE was awarded two letters of acceptance from the West Bengal government for the design, build, operation, and maintenance of hybrid electric ferries under the West Bengal Inland Water Transport, Logistics and Shipping Development (WBIWTLSD) project.

The project involves the construction of 100 non-air-conditioned hybrid electric ferries for cross-river operations, as well as 200 twin-deck hybrid electric ferries with air conditioning on the main deck. This contract is expected to modernize the state's water transport infrastructure and promote the use of green technologies.

In addition, GRSE also signed an agreement for the construction and delivery of one of four additional multi-purpose vessels (MPVs) with a 7,500 deadweight tonnage (DWT) capacity. This order was followed by another contract with Carsten Rehder Schiffsmakler and Reederei GmbH & Co KG, a German shipbuilding firm, for the construction and delivery of the fifth multi-purpose vessel of similar tonnage. These deals are part of a larger option agreement between the two companies, further strengthening GRSE's international reach in shipbuilding.

On Friday, shares of Garden Reach Shipbuilders & Engineers Ltd closed at Rs 1,756.00, marking a 0.70% increase or a gain of Rs 12.20 on the Bombay Stock Exchange (BSE). The stock has seen steady performance over the past few weeks, with analysts attributing the rise to the company's robust order book and continued success in securing high-value contracts.

The development and construction of the Acoustic Research Ship is particularly significant given India's growing focus on improving its naval capabilities and research. Underwater acoustics and sonar technology are critical areas for modern naval operations, and having a dedicated vessel for this purpose will enable the Indian Navy to conduct detailed research and testing in the field. This ship will contribute to strengthening the country's defence research in oceanographic science, which is essential for strategic maritime operations.