Garden Reach Shipbuilders Q2 Results Review - Earnings Expected To Peak Out In FY25: ICICI Securities
We expect execution to peak out by FY25, following which cash accretion would slow down given OB concentration on ship building.
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ICICI Securities Report
Garden Reach Shipbuilders and Engineers Ltd.’s Q2 FY23 performance missed consensus estimates. Key highlights:
Ebitda was down 12% YoY at Rs 483 million despite higher gross margin owing to sub-contracting expenses shooting up 52% YoY;
other income rose 13% YoY to Rs 408 million mainly due to higher advances;
Garden Reach Shipbuilders' orderbook as of Sep-22 end stood at ~Rs 230 billion of which shipbuilding accounts for 97.5%.
Going ahead, we expect execution to peak out by FY25, following which cash accretion would slow down given the orderbook concentration on ship building (with long gestation period).
Furthermore, request for proposal for a big order on the anvil is yet to be floated.
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