State-owned Shipping Corporation of India’s (SCI) share price is on a gaining streak. Its shares hit the 5 percent upper circuit for two days in a row and were locked at ₹ 89.15 apiece at 11:52 AM on Wednesday after a buzz about the privatization of the company.
Reportedly, the Indian Government is planning to invite financial bids for the privatization of the company next month. It announced plans to privatize a number of state-run companies, including the SCI, in 2019 and its plan to sell a stake in the company was stalled due to regulatory delays for a few years.
The SCI had to separate its non-core assets prior to the government hiving off its 63.75 percent stake. The company completed the spinoff last month after getting regulatory approval late in February.
SCI Land Assets Ltd, the resulting demerged entity, will have to be listed before April 23 and the government now aims to invite financial bids for SCI which owns and operates around one-third of India’s total tonnage by mid-May, according to reports. The final decision will be taken on April 14.
SCI is the largest Indian shipping firm which owns and operates around one-third of Indian tonnage. With a market capitalization of ₹ 3,957 crores it is a small-cap company.
The company has a low return on equity of 10.02 percent and an ideal debt-to-equity ratio of 0.31. Its shares were trading at a price-to-earnings ratio of 5.91, which is higher than the industry P/E ratio of 1.27, indicating that the stock might be overvalued as compared to its peers. Moreover, its share price has declined to the tune of 30 percent in the past year.
Written by Simran Bafna