Garden Reach Sh. (GRSE)
Fast GrowerFairStock Score: 70/100 — STEADY
Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹2,618.6 |
| Market Cap | ₹29,996.59 Cr |
| P/E Ratio | 37.45 |
| ROCE | 36.64% |
| ROE | 33.14% |
| Dividend Yield | 1.02% |
| Profit Growth | 43.82% |
| Debt/Equity | 0.01 |
| Sales Growth | 38.47% |
| Free Cash Flow | ₹185.37 Cr |
| Promoter Holding | 74.5% |
| 52-Week Range | ₹1,963.7 — ₹3,338.9 |
| Sector | Aerospace & Defense |
| Book Value | ₹229.27 |
Strengths
- Zero debt with ROE of 33.14% and ROCE of 36.64% reflects exceptional capital efficiency
- Strong growth: sales up 46.65% and profit up 74.54% with latest quarter net profit of ₹171 Cr
- Promoter holding of 74.50% ensures strong alignment with minority shareholders
- Piotroski F-Score of 7/9 indicates sound financial fundamentals
- Positive free cash flow of ₹185 Cr supports internal funding capability
Concerns
- Valuation is extreme: P/E of 40.47 and P/B of 15.86 leave no margin of safety
- Price is 391% above the Graham Number of ₹495.51 and far above DCF value of ₹866.31
- Dividend yield of 0.57% and FCF yield under 1% offer negligible investor return cushion
- Defense order flows can be lumpy, making recent high growth potentially cyclical rather than sustainable
AI Analysis
As a value investor, I first ask whether the business earns high returns on capital without leverage. GRSE does: ROE is 33.14%, ROCE is 36.64%, and debt-to-equity is zero. Promoters holding 74.50% aligns interests with minority shareholders. Piotroski F-Score of 7/9 also suggests solid financial health. Recent momentum is real—sales grew 46.65% and profit grew 74.54%, with the latest quarter showing net profit of ₹171 Cr on sales of ₹1,896 Cr. This is a high-quality defense shipbuilder with a niche moat. But Graham taught me that price is what you pay, value is what you get. Although the business quality is excellent, Mr. Market is asking ₹2,878.25 for a book value of ₹181.51—15.86 times book. The earnings multiple is 40.47. The Graham Number, a conservative benchmark based on earnings and book value, is ₹495.51, meaning the stock trades at a massive premium to that threshold. Even the DCF intrinsic value estimate of ₹866.31 is far below the current price. At this price, dividend yield is only 0.57%, and free cash flow of ₹185 Cr is under 1% of market cap. I cannot call this a bargain; it is a great business, but valuation leaves no margin of safety. It may be a wonderful compounder if growth continues, but discipline requires a better entry point. I admire the shipyard from a distance and wait for the price to become sensible.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer