Shipbuilding stocks in focus; Garden Reach, Mazagaon Dock hit record highs

Shares of shipbuilding & allied services companies are in focus as they rallied up to 14 per cent on the BSE in Tuesday’s intra-day trade on expectations of strong earnings. These companies are likely to report highest ever turnover for the financial year 2021-22 (FY22).

In intra-day trade, Garden Reach Shipbuilders & Engineers Limited (GRSE) (up 14 per cent to Rs 307.45) and Mazagon Dock Shipbuilders (up 8 per cent to Rs 326.90) hit their respective record highs on the BSE in an otherwise weak market. Cochin Shipyard rallied 6.5 per cent to Rs 354.95. In comparison, at 01:11 pm, the S&P BSE Sensex was down 0.89 per cent at 58,440 points. 

In the past one month, these three stocks have outperformed the market by surging between 15-35 per cent, as compared to a 5 per cent rise in the benchmark index.

Shares of Mazagon Dock Shipbuilders were trading at the highest level since their listing in October 2020. The stock surpassed its previous high of Rs 320.70 touched on November 10, 2021. While, GRSE surpassed it earlier high of Rs 279.80 hit on November 15, 2021.

As reported by Business Standard, the political and economic uncertainties in Sri Lanka and the congestion at the Colombo port are forcing more ships to turn towards Indian ports in recent months.

According to industry bodies, the past one month saw diversion of around 5-10 per cent of normal cargo from Colombo to Indian ports, with Chennai, Ennore, Mundra and VO Chidambaranar Port in Thoothukudi being major beneficiaries.

The Kochi International Container Transshipment Terminal (ICTT) in Vallarpadam, India’s first transshipment terminal, saw an increase of 62 per cent in traffic to 13,609 twenty-foot equivalent units (TEU) in March 2022, compared to 8,394 TEU during March 2021, due to the crisis in Sri Lanka, the newspaper reported. CLICK HERE FOR FULL REPORT

Meanwhile, GRSE, one of the leading warship builders in the country, has recorded the highest ever turnover of Rs 1,750 crore (provisional & unaudited) for FY22, reflecting year-on-year (YoY) growth of 53 per cent.

The company said that despite being a labour intensive industry, it effectively managed the challenges posed by the COVID-19 pandemic and progressed operations, continuously improving internal efficiencies.

The shipyard also signed strategic MoUs with global shipyards & academia to enhance its shipbuilding prowess. The Bailey Bridge Division of GRSE has developed new improved versions of portable bridge designs through R&D efforts and for the first time, a MoU was signed by GRSE with Border Roads Organisation (BRO) for fabrication, supply, erection and launching of 27 double-lane galvanized modular bridges for difficult terrains across states of the North East.