 "Garden Reach inks MoU with National Highway Infrastructure; shares up 7%")
Garden Reach Shipbuilders & Engineers share price soared as much as 7 per cent on Friday, August 30, touching an intraday high of Rs 1,876 per share on BSE. The scrip surged after the company signed a Memorandum of Understanding (MoU) with National Highway Infrastructure Development Corporation.
"Garden Reach Shipbuilders & Engineers Ltd. has signed an MoU with National Highway Infrastructure Development Corporation Ltd. for the fabrication, supply, and launching of Double-Lane Class 70 Modular steel & Bailey bridges," the company said in a stock exchange filing.
The amount of the transaction was not mentioned in the filing.
At around 11:48 AM, shares of Garden Reach Shipbuilders were up 6.52 per cent or Rs 114.4 at Rs 1,869.3 per share. The market capitalisation of the company stood at Rs 21,204.72 crore.
As per the filing, Garden Reach Shipbuilders will construct and deliver Class 70R Double-Lane Bridges. This will enhance connectivity in critical forward areas along India's borders, facilitating seamless troop and equipment deployment.
The company, in the past, had inked a similar MoU with the Border Roads Organisation (BRO) and has already supplied 44 bridges Pan-India.
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Besides, the company had also signed a MoU with Hyderabad-based Medha Servo Drives Pvt Ltd in July, for the joint manufacture of advanced electrical/electronic equipment and systems.
Before that, the company signed a contract with the National Centre for Polar & Ocean Research (NCPOR), Ministry of Earth Sciences, Government of India, for the construction and delivery of an Ocean Research Vessel (ORV).
The order book of Garden Reach Shipbuilders as of March 31, 2024, stood at Rs 22,652 crore.
That said, ICICI Securities has a 'Sell' call on the stock with a target price of Rs 515 per share. As per the brokerage, the earnings per share (EPS) is constrained between Rs 55 to Rs 65.
"Our target price implies a P/E ratio of 10x on FY26E EPS, which we believe is fair given the considerable uncertainties around future orders and the current order book peaking out in FY26E," the brokerage had said in its Q1FY25 result review report.
Additionally, the potential orders are expected to be on competitive bidding; hence, margins are expected to stay under pressure.
"We are factoring in a steady margin of 6–7 per cent," the report said.
Garden Reach Shipbuilders share price: Past performance
In the past one year, shares of Garden Reach have given a multi bagger return of 121 per cent against Sensex's rise of 26.2 per cent.