Garden Reach Shipbuilders & Engineers declares highest-ever dividend; Buy the dip or sell?
Garden Reach Shipbuilders & Engineers declares highest-ever dividend; Buy the dip or sell?
Garden Reach Shipbuilders & Engineers (GRSE), a leading defence Public Sector Undertaking (PSU), has announced its highest-ever interim dividend of ₹8.95 per share for the financial year 2024-25 (FY25), along with its Q3FY25 earnings results. This announcement comes after a significant decline in the company's stock price, which is currently down 47% from its record high.
Q3FY25 Earnings: Positive Growth Amid Declining Stock Price
In the October-December quarter of FY25, GRSE reported a strong 11.2% growth in its consolidated net profit, reaching ₹98.2 crore, up from ₹88.3 crore during the same period in the previous year. The company’s revenue from operations saw a significant increase of 37.7%, rising to ₹1,271 crore compared to ₹924 crore in Q3FY24. Additionally, the Earnings Per Share (EPS) for the quarter stood at ₹8.57, compared to ₹7.70 in the previous year.
Despite the positive financial results, the stock of Garden Reach Shipbuilders faced a 5.31% drop on February 3, 2025, settling at ₹1,508.45 per share on the Bombay Stock Exchange (BSE). The shares opened at ₹1,570 but hit an intraday low of ₹1,474.30 before recovering slightly. This decline comes after the stock had reached an all-time high of ₹2,834.60, meaning the current price is 47% lower than its 52-week peak.
Highest-Ever Dividend Declared
The company’s Board of Directors, at their meeting on February 3, declared an interim dividend of ₹8.95 per equity share of face value ₹10 each, amounting to ₹102.52 crore. This payout will be made from the company’s profits for the nine months ending December 31, 2024. Shareholders entitled to the dividend will be those registered as of the Record Date, set for February 7, 2025.
Stock Performance and Investment Considerations
Garden Reach Shipbuilders has been a strong performer in the stock market, delivering a 533% return over the last five years and a nearly 70% increase in the past year. The company has built over 100 warships and patrol vessels for the Indian Navy and Coast Guard and is one of the key players in India's defence shipbuilding sector.
Despite the impressive dividend and growth in revenue, the recent stock price drop raises questions for investors. With the stock currently trading at half of its record-high value, potential investors may wonder whether the current price presents a good entry point or if the stock may face further declines.
Should You Buy or Sell?
The decision to buy or sell depends on your investment strategy. For long-term investors, the solid financial performance and high dividend yield may offer some reassurance, especially given the strong potential of the defence sector. However, the steep drop in share price may indicate market volatility or external factors affecting investor sentiment. Caution is advised, and a thorough analysis of the stock's future prospects is recommended before making any decisions.
