The rising tensions in the Middle East and no signs of easing of the Russian – Ukraine war has once again put the spotlight on the shipping industry and the freight rates they are earning to transport products during these difficult times.
Investors on Dalal Street have adopted a cautious attitude for leading shipping stocks – the Great Eastern (GE) Shipping Company stock declined 1.5 % on Wednesday trade to close at Rs 965.5. This stock had hit a 52-week low of Rs 797.25 on 4 March 2025. Nearest rival, PSU-controlled Shipping Corporation of India (SCI) ended Wednesday’s trade 2.8 % higher at Rs 222. SCI had hit a 52-week low of Rs 138.25 on 3 March 2025.
Indian shipping companies typically have 70% of their total fleet capacity dedicated to the tanker segment for transporting crude oil and other products. And in key tanker segments like VLCC (Very Large Crude Carrier), spot freight rates from early April 2025 till date have averaged nearly $ 41,800 per day vis-à-vis $ 42,260 per day in the June 2024 quarter, point out senior executives at leading shipping companies.
In other tanker segments like Suezmax, spot freight rates from early April 2025 till date have averaged at nearly $ 46,690 per day vis-à-vis $52,540 per day in the June 2024 quarter.
Shipping industry sources highlight that prior to the tensions between Israel and Iran, in April and May 2025 global oil prices had softened and were not too far from the price cap of $ 60 per barrel that western nations had imposed on Russian oil prices. And there was an increase in global shipping capacity that was able to transport crude oil resulting in softer average spot tanker freight rates that have been seen in the June 2025 quarter.
Meanwhile, in the smaller dry bulk segment, the Baltic Dry Index has averaged 1,418 levels from early April 2025 till date vis-à-vis 1,848 in the June 2024 quarter.
Shipping companies utilise a combination of short and long-term contracts with their customers to maximize their earnings.
Performance in the March 2025 quarter
GE Shipping’s consolidated revenue from operations declined nearly 18% y-o-y to Rs 1,223 crore in the March 2025 quarter while its net profit fell nearly 60% y-o-y to Rs 363 crore in the quarter under review.
The company has highlighted in its shipping business total owned tonnage of 3.04 million dead weight tonnage (dwt) in the March 2025 quarter vis-à-vis 3.36 million dwt a year earlier. Also, total revenue days of 3,546 days in the March 2025 quarter vis-à-vis 3,835 days a year earlier.
In addition, crude carriers earned on average nearly $ 31,000 per day in the March 2025 quarter vis-à-vis $ 53,180 a year earlier.
Meanwhile, Shipping Corporation of India’s consolidated revenue from operations declined 9.4 % y-o-y to Rs 1,325.2 crore in the March 2025 quarter and its net profit fell nearly 39.7 % y-o-y to Rs 185 crore in the quarter under review.
Investors on Dalal Street
G E Shipping trades at a P/E of about 5.5 times estimated consolidated FY26 earnings. The stock has traded with a median P/E of about 7.2 times over the past 10 years, according to Screener.
Meanwhile, Shipping Corporation of India trades at a P/E of about 11 times estimated consolidated FY26 earnings. This PSU stock had a median P/E of about 6.2 times over the past 10 years, according to Screener.
And given the volatility in global freight rates and no signs of easing tensions in the Middle East tensions, investors could adopt a wait and watch attitude for shipping stocks.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his dependents do hold the stocks discussed in this article.
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