Garden Reach Shipbuilders & Engineers (GRSE) and Cochin Shipyard reported contrasting financial performances in Q2 FY27. While GRSE recorded growth in revenue and profitability, Cochin Shipyard reported a sharp decline in net profit despite higher revenue. The results come amid changes in project execution schedules, pressure on shipbuilding margins and expectations of fresh naval orders.

GRSE’s earnings growth remained strong during the first half of FY27, although its revenue momentum could moderate in FY28 due to delays in the execution of its next-generation Corvette programme. Cochin Shipyard, meanwhile, faces near-term margin pressure, but its commercial shipbuilding business makes it the preferred pick for Elara Securities over the medium to long term.

GRSE reported revenue from operations of Rs 1,827 crore in Q2 FY27, compared with Rs 1,677 crore in the corresponding quarter last year, registering growth of 9%.

Total income increased 8% to Rs 1,886 crore from Rs 1,746 crore. Net profit (PAT) rose 12% to Rs 172 crore against Rs 154 crore in Q2 FY26.

EBITDA increased 13% to Rs 254 crore from Rs 225 crore, while profit before tax (PBT) grew 11% to Rs 232 crore compared with Rs 209 crore in the year-ago quarter.

For H1 FY27, GRSE’s revenue and profitability also registered double-digit growth. Revenue from operations rose 22% to Rs 3,641 crore from Rs 2,987 crore in H1 FY26. Total income increased 21% to Rs 3,800 crore against Rs 3,128 crore.

Net profit grew 26% to Rs 345 crore from Rs 274 crore, while EBITDA increased 23% to Rs 503 crore from Rs 409 crore. PBT also rose 23% to Rs 463 crore from Rs 376 crore.

The company’s earnings per share increased 26% to Rs 30.10 against Rs 23.92 in the corresponding period last year.

Commenting on the results, Cmde PR Hari, IN (Retd), Chairman and Managing Director of Garden Reach Shipbuilders & Engineers Limited (GRSE), said in a social media post on X (formerly Twitter), “The Q2 & H1 FY27 results have been encouraging, with GRSE once again delivering a strong financial performance.”

During the quarter, GRSE launched the second Next Generation Offshore Patrol Vessel, ‘Shruti’, for the Indian Navy and the Ocean Research Vessel, ‘Sagar Manthan’, for NCPOR, Ministry of Earth Sciences. The company also conducted the Bhumi Pujan of three new brownfield infrastructure projects in West Bengal.

Garden Reach Shipbuilders & Engineers (GRSE) share price performance

Cochin Shipyard reported consolidated net profit of Rs 54 crore in Q2 FY27, down 50% from Rs 108 crore in the corresponding quarter last year.

Revenue from operations increased 12% to Rs 1,249 crore from Rs 1,119 crore. However, higher expenses affected profitability, with total expenses rising to Rs 1,257 crore from Rs 1,096 crore.

EBITDA declined 31% to Rs 51 crore from Rs 74 crore, while the EBITDA margin contracted to 4.04% from 6.57%.

The company’s board approved an interim dividend of Rs 3 per fully paid-up equity share of Rs 5 each for FY27. November 16, 2026, is the record date, and payment is scheduled for December 9, 2026.

Cochin Shipyard share price performance

The September-quarter results show different trends in the earnings performance of the two shipbuilders. GRSE recorded growth in net profit and EBITDA, while Cochin Shipyard reported higher revenue but lower profitability.

GRSE could see slower revenue growth in FY28 due to changes in its order book and the delayed execution of its next-generation Corvette programme. Harshit Kapadia, Senior President – Capital Goods, Defence, Railways, Consumer Durables, Consumer Electrical and EMS at Elara Securities, expects revenue growth to remain between flat and 5% in FY28.

“Given that there is going to be a decline in the order book because of the next-generation Corvette programme, we see revenue momentum slowing for Garden Reach Shipbuilders and Engineers (GRSE). We are expecting flattish to around 5% growth for GRSE in FY28,” Kapadia said.

He added that the next-generation Corvette order was received after a delay of around nine months, pushing the anticipated improvement in execution from FY28 to FY29.

“As far as the next-generation Corvette order is concerned, GRSE received it after a delay of around nine months. We expect execution to pick up from FY29 onwards. Earlier, we were expecting this to happen from FY28,” he added.

Explaining the revenue recognition pattern, Kapadia said, “For the initial one to two years, the revenue contribution from the next-generation Corvette order should not be more than 15% on a cumulative basis. In shipbuilding, revenue recognition follows a bell curve. In the initial years, revenue recognition is limited because the company is primarily working on the hull and design of the ship, which carry lower value.”

He further explained that revenue recognition increases when procurement of equipment gathers pace. “The larger revenue contribution comes later, when the company starts procuring bought-out items such as electronics, radars, sonars and other equipment, including weapon systems. Revenue recognition then increases substantially before tapering off towards the end of the programme,” he said.

Cochin Shipyard’s lower profitability in Q2 was partly linked to the higher contribution of bought-out items in revenue from its ongoing missile vessel programme. Kapadia said, “There was some increase in costs during Q2. In shipbuilding, when you are accounting for bought-out items, the margins on those items are very low.”

He explained that a substantial portion of revenue recognition during the quarter came from bought-out items, which carry relatively lower margins. “In Cochin Shipyard’s case, the company was in the process of building vessels under the missile vessel order, which is largely under execution. A large part of the revenue recognition was from bought-out items, resulting in higher costs and lower margins,” he added.

Kapadia expects the pressure to continue until the company starts recognising profitability from the relevant stages of project execution.

“We may see this trend continue for some time, unless the company reaches a stage where profitability also starts getting booked,” he noted.

Despite GRSE’s stronger recent financial performance, Elara Securities prefers Cochin Shipyard over the medium to long term, primarily due to its commercial shipbuilding business.

Kapadia said, “From a medium- to long-term perspective, Cochin Shipyard would be our preferred pick, purely driven by the commercial shipbuilding aspect.”

However, he expects GRSE to perform relatively better in the near term. “However, from a short-term perspective, Cochin Shipyard would continue to see a decline in revenue, whereas GRSE may remain flattish to report some growth. In that respect, GRSE’s performance may be better in the short term,” he explained.

“But from a long-term perspective, I think Cochin Shipyard can outperform GRSE,” he added.

The domestic shipbuilding sector could receive fresh demand from several large naval and shipping tenders expected to be announced in the coming period.

According to Kapadia, the potential orders cover submarines, destroyers, landing platform docks (LPDs) and mine countermeasure vessels.

“We are anticipating a good pipeline of orders to be announced shortly. There are certain large tenders in shipping across submarines, destroyers, landing platform docks (LPDs) and mine countermeasure vessels,” he said.

He estimated the total pipeline at more than Rs 1 lakh crore, with the possibility of it exceeding Rs 1.5 lakh crore.

“The pipeline is worth more than Rs 1 lakh crore, probably Rs 1.5 lakh crore or more. As these orders fructify, we will see demand coming back into the companies we have discussed,” Kapadia added.

GRSE reported growth in revenue and profitability in Q2 and H1 FY27, while Cochin Shipyard faced pressure from higher project costs and the contribution of low-margin bought-out items. However, GRSE’s revenue growth could moderate in FY28 as execution of its next-generation Corvette programme is expected to gather pace only from FY29.

Elara Securities expects GRSE to perform relatively better in the near term but prefers Cochin Shipyard over the medium to long term, citing its commercial shipbuilding business. The anticipated naval and shipping order pipeline of more than Rs 1.5 lakh crore could provide fresh opportunities for both companies, with execution schedules and project margins determining how these orders translate into revenue and profitability.