GRSE Shares Surges 5% Before Erasing Gains; PSU Defence Stock Observes High Volatility After USD 108Mln Deal

Shares of the Miniratna PSU defence stock Garden Reach Shipbuilders witnessed significant volatility in the stock market today following its USD 108 million deal with a German firm.

The stock opened at Rs. 1,754 per share, marking a 3% rise from the previous close. The defence stock surged 5% to an intraday high of Rs. 1,790 but later erased all gains, dropping to an intraday low of Rs. 1,700.

Meanwhile, the Nifty India Defence Index also slipped 1.49% today. However, over the past week, the index has gained 9.79%, due to strong momentum ongoing in the defence sector.

Defence stocks have witnessed massive gains in 2024, with Garden Reach Shipbuilders' share price surging 29% in the last 30 days. The stock continues to outperform along with peers such as Mazagon Dock, Cochin Shipyard, BEL, etc., which have been on a similar rising trend in recent days.

GRSE Signs Contract for Two More Multi-Purpose Vessels with German Firm

Garden Reach Shipbuilders and Engineers (GRSE) Ltd has signed a contract with Carsten Rehder Schiffsmakler and Reederei GmbH & Co. KG, a German company, for the construction and delivery of the 7th and 8th Multi-Purpose Vessels (MPVs) of 7,500 DWT in Hamburg, Germany; the company announced this update in an exchange filing on March 24th.

This agreement follows a previous 'Option Agreement' between both companies for the purchase of four additional MPVs from GRSE. With this latest deal, GRSE will build a total of eight vessels under the contract, valued at approximately $108 million.
The corporate filing also stated that "Each MPV will be 120 metres long, 17 metres wide, and have a maximum draught of 6.75 metres. These ships can carry 7,500 metric tonnes of cargo and feature a single cargo hold designed to transport bulk, general, and project cargo, including containers on hatch covers."

Additionally, these vessels are specially designed to transport large windmill blades on deck, making them a crucial part of the growing renewable energy sector.

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Key Defence Stocks in Focus After DAC's ₹54,000 Crore Approvals

The Defence Acquisition Council (DAC) has approved ₹54,000 crore worth of defence projects, boosting investor interest in defence stocks. Here are the key procurements:

Army - Upgrading T-90 tank engines from 1,000 HP to 1,350 HP, improving mobility, especially in high-altitude areas.

Navy - Procuring Varunastra torpedoes, an indigenous anti-submarine weapon developed by the Naval Science & Technological Laboratory, to strengthen underwater defence.

Air Force - Acquiring Airborne Early Warning & Control (AEW&C) aircraft, enhancing surveillance and combat capabilities.

These approvals are expected to benefit Indian defence companies, especially Bharat Dynamics Ltd (BDL) and other firms involved in indigenous defence manufacturing

About GRSE

The journey of Garden Reach Shipbuilders & Engineers Ltd., a Defence Public Sector Undertaking under the administrative control of the Ministry of Defence and a Schedule 'A' Mini Ratna Category I company, dates back to 1884 when it started its journey as a small workshop to repair vessels of the River Steam Navigation Company. The company was taken over by the government of India in 1960. GRSE has the distinction of becoming the first shipyard of independent India to build a warship for the Indian Navy, the Seaward Defence Boat (SDB) INS Ajay, way back in 1961. GRSE also built the first-ever Indian export warship, "CGS Barracuda", for the government of Mauritius; a fast patrol vessel, "SCG PS Zoroaster", for Seychelles; and an ocean-going cargo & passenger ferry vessel, "MV Ma Lisha", for the Cooperative Republic of Guyana. The shipyard was conferred the status of a Miniratna Category I Company in 2006.