India’s shipping sector is pivotal to its economy, handling approximately 1,542 million tonnes of cargo in 2023-24, representing a 7.5% growth from the previous year. The country boasts 12 major ports and 64 non-major ports, with significant improvements in maritime logistics performance.
Price movement
With a market capitalization of Rs 13,012.41 crore, the shares of Great Eastern Shipping Company were trading at Rs 885.40 per share, decreasing around 2.04 percent as compared to the previous closing price of Rs 903.80 apiece.
Matter explanation
Great Eastern Shipping Company, the largest private sector shipping firm, reported a 42% CAGR in net profit over three years, increasing from Rs 919 crore in FY21-24 to Rs 2,614 crore in FY23-24. This impressive growth underscores the company’s expanding market presence and consistent financial performance. The company has a high Piotroski score of ‘Seven’.
Vanguard Fund group holds 1,442,313 equity shares which is equivalent to 1 percent of the company as of December 2024.
Shipping Market Insights
The shipping market faced disappointment, particularly in the tanker segment, with lower earnings and weaker-than-expected oil demand growth. The anticipated winter spike did not materialize, and both crude and product tanker earnings were subdued. The dry bulk market also remained weak, with Capesize vessels outperforming sub-capesize vessels due to reduced trade.
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Fleet Value Decline
The company’s total fleet value declined by $150 million between September and December, driven by a 15% drop in asset prices, with older assets seeing larger decreases. The dry bulk order book represents over 10% of the fleet, signaling potential future supply challenges.
Offshore Operation
The company noted a gradual improvement in jack-up market utilization, with two rigs up for re-pricing in H2 FY25. A short-term contract for Greatdrill Chetna was terminated due to force majeure, which is being disputed. The vessel business continues to deliver strong profitability, with higher re-pricing levels in recent months.
Future Outlook
The company remains cautious about the current crude and product tanker markets but sees opportunities in the dry bulk sector. It plans to focus on second-hand ship purchases rather than new builds, with growth dependent on favorable asset prices, emphasizing patience in capital expansion.
Management comments
Management is optimistic about future growth, particularly through advantageous asset acquisitions when market conditions permit. They recognize the cyclical nature of the industry, noting that periods of low freight rates could offer significant buying opportunities for expansion.
Company Profile
The Great Eastern Shipping Company Limited is an India-based private-sector shipping company, engaged in providing transportation of crude oil, petroleum products, gas, and dry bulk commodities.
Written by Abhishek Singh
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