Garden Reach Shipbuilders & Engineers Limited

“GRSE owns a genuinely durable franchise — one of three government-designated Indian naval warship builders with a multi-decade demand tailwind from India's naval expansion program — but its cost-plus contract architecture permanently caps ROIC, PSU governance misaligns management incentives from minority shareholders, and the current 49x trailing P/E with 14.7x book leaves no margin of safety for a business that is structurally incapable of compounding at rates that justify those multiples. Expected long-term returns of 6-7% annually are inadequate. This is a business worth owning at 25-35x earnings; it is not worth owning at 49x.”