Explosive Surge: PSU Defence Stocks GRSE and Cochin Shipyard Ignite with Up to 19% Rally on Stellar Q1 Performance

In a resounding display of their strength, shares of two prominent public sector undertaking (PSU) defence companies, Garden Reach Shipbuilders & Engineers (GRSE) and Cochin Shipyard, blazed an impressive trail, surging up to 19% on the BSE. The surge was ignited by their robust financial performance in the June quarter, setting the stage for significant gains.

Warship manufacturer GRSE’s shares soared by an astounding 19%, reaching a new pinnacle of Rs 781 on the BSE, following the announcement of its most formidable net profit to date – a substantial Rs 77 crore in the June quarter. This remarkable achievement marked a remarkable 54% increase compared to the Rs 50 crore reported in the same period the previous year.

The company’s total income in the initial quarter of the current fiscal soared to Rs 827 crore, reflecting a notable 33% surge from the previous year’s Rs 621 crore. Notably, revenue from operations in this quarter burgeoned by 30%, ascending to Rs 756 crore from last year’s Rs 580 crore. Furthermore, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) surged to Rs 117 crore, a 58% growth from the previous year’s Rs 74 crore.

GRSE Chairman and Managing Director Cmde PR Hari lauded the vibrant commencement of the fiscal year, with the shipyard achieving its most remarkable quarterly results in its history. The upcoming launch of the third Frigate of P17A on August 17th adds to the company’s momentum, as it continues to spearhead industrial growth.

Even as the clock struck 11:23 am, the stock remained exuberantly high at 18% above its previous position, valued at Rs 773 on the BSE. The year-to-date performance of GRSE shares has seen an impressive surge of over 60%, further accentuated by its multibagger returns of over 180% within the last year.

However, as per Trendlyne data, a note of caution is sounded with the average target price of GRSE being pegged at Rs 525, indicating a potential downside of 32% from current market values. The consensus recommendation from three analysts for the stock leans towards a ‘Hold’.

Meanwhile, the rise of Cochin Shipyard shares was also nothing short of remarkable, with an impressive gain of over 11%, propelling the stock to a new 52-week zenith of Rs 761. The crescendo was attributed to a staggering 135% year-on-year (YoY) surge in consolidated net profit, soaring to Rs 98.65 crore from last year’s Rs 42 crore in the corresponding quarter.

On the financial front, revenue from operations experienced a substantial uptick, climbing 7.9% YoY to Rs 475.9 crore, exemplifying its growth from the year-ago quarter’s Rs 440.9 crore. Notably, the company reported an EBITDA of Rs 78.7 crore for the June quarter, with impressive margins of 16.5%.

In the markets, the stock continued to shine at 11:36 am, trading 10% higher at Rs 758 on the BSE. Cochin Shipyard’s splendid performance rewarded its investors with multibagger returns, as the stock soared by a remarkable 125% over the past year.

Yet, the prudent reminder from Trendlyne data indicates an average target price of Rs 682 for Cochin Shipyard, projecting a potential drawback of 10% from prevailing market rates. Nevertheless, the consensus recommendation from four analysts leans towards a resounding ‘Buy’.

In sum, the market landscape witnessed an explosive surge as GRSE and Cochin Shipyard demonstrated their prowess, leaving an indelible mark with their substantial gains of up to 19%. Their stellar Q1 performance has ignited investor enthusiasm, setting the stage for a promising journey ahead.

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