Shipping stocks Navigating the difficult waters – Stock Insights News
Shipping Stocks Face Turbulent Waters
The ongoing geopolitical tensions in the Middle East and the persistent conflict in Ukraine are casting a shadow over the shipping industry, impacting freight rates and investor sentiment. On Dalal Street, leading shipping stocks are experiencing fluctuations, with Great Eastern (GE) Shipping Company witnessing a decline, while its competitor, the Shipping Corporation of India (SCI), saw a modest increase. As the industry grapples with these challenges, analysts are closely monitoring freight rates and market dynamics.
Current Market Dynamics
Investors are approaching the shipping sector with caution amid rising geopolitical tensions. On Wednesday, GE Shipping’s stock fell by 1.5%, closing at Rs 965.5, following a 52-week low of Rs 797.25 recorded on March 4, 2025. In contrast, SCI’s stock rose by 2.8% to end the day at Rs 222, recovering from a low of Rs 138.25 earlier this month. The shipping industry in India predominantly allocates about 70% of its fleet capacity to the tanker segment, which is crucial for transporting crude oil and other products.
Recent data indicates that spot freight rates for Very Large Crude Carriers (VLCC) have averaged approximately $41,800 per day since early April 2025, slightly down from $42,260 per day in the previous quarter. Similarly, Suezmax tankers have seen average rates drop to $46,690 per day from $52,540 per day in the June 2024 quarter. These declines are attributed to a combination of increased global shipping capacity and softened oil prices, particularly before the escalation of tensions between Israel and Iran.
In the dry bulk segment, the Baltic Dry Index has also shown a downward trend, averaging 1,418 points since April 2025, compared to 1,848 points in the previous quarter. Shipping companies are adapting by utilizing a mix of short and long-term contracts with their customers to optimize earnings during these uncertain times.
Quarterly Performance Overview
In the March 2025 quarter, GE Shipping reported a significant decline in its financial performance, with consolidated revenue from operations dropping nearly 18% year-on-year to Rs 1,223 crore. The company’s net profit plummeted by almost 60% to Rs 363 crore. GE Shipping’s total owned tonnage decreased to 3.04 million deadweight tonnage (dwt) from 3.36 million dwt a year earlier, and total revenue days fell to 3,546 from 3,835 days in the same period.
Crude carriers under GE Shipping earned an average of $31,000 per day in the March 2025 quarter, a stark decline from $53,180 per day a year prior. Meanwhile, SCI also faced challenges, with its consolidated revenue from operations declining by 9.4% year-on-year to Rs 1,325.2 crore and net profit decreasing by 39.7% to Rs 185 crore during the same quarter.
Investor Sentiment and Future Outlook
Currently, GE Shipping trades at a price-to-earnings (P/E) ratio of approximately 5.5 times its estimated consolidated FY26 earnings, compared to a median P/E of 7.2 times over the past decade. On the other hand, SCI’s P/E ratio stands at around 11 times its estimated FY26 earnings, with a historical median of 6.2 times. Given the volatility in global freight rates and ongoing geopolitical tensions, investors are likely to adopt a wait-and-see approach regarding shipping stocks.
