Shipping stocks are sailing ahead strongly, with spot freight rates in the key tanker segment surging ahead.
The 75% Surge: Understanding the rate spike
In tanker segments like VLCC (very large crude carrier) spot freight rates of up to $ 135,000 per day have been recently reported on routes between the Middle East and ports in China. Spot freight rates had jumped to $ 90,000 per day levels in VLCC segment in October 2025 as compared to an average of $ 51,465 per day in the September 2025 quarter.
The surge in tanker freight rates is attributed to increased oil production from OPEC+ members, limited global availability of tanker vessels, given US and EU sanctions on ships from different countries.
In other tanker segments, like Suezmax, spot freight rates have reached $ 70,000 per day levels as compared to an average of $ 52,000 per day in Q2FY26.
Indian shipping companies typically have 70% of their total fleet capacity dedicated to the tanker segment for transporting crude oil and other products. Shipping companies utilise a combination of short and long-term contracts with their customers to maximize their earnings.
The surge in spot freight rates has not gone unnoticed by investors on Dalal Street. GE Shipping was broadly flat at Rs 1,082.4 in early Tuesday trade, and not too far from its 52-week high of Rs 1,180.7 that was reached on 12 November, 2025.
And Shipping Corporation of India was also broadly flat at Rs 237.3 in early Tuesday trade, and had reached its 52-week high of Rs 280 on 24 October, 2025.
Q2 report card: Why revenues dipped despite the boom
GE Shipping’s consolidated revenue from operations fell 8% y-o-y to Rs 1,241.8 crore in the September 2025 quarter. This was because revenue in its key shipping business declined nearly 18% y-o-y to Rs 1,050.7 crore in the quarter under review.
The company highlighted that its total owned tonnage was 3.13 million dead weight tonnage (dwt) in Q2FY26 as compared to 3.36 million dwt a year earlier. Also, its total revenue days was 3,678 in the September 2025 quarter as against 3,984 a year earlier. However, earnings from crude carriers were $ 29,974 per day in Q2FY26, a rise of 5% on a y-o-y basis.The company’s other income jumped 44.5% y-o-y to Rs 139.9 crore in the September 2025 quarter, and it helped consolidated net profit rise 1% y-o-y to Rs 581.4 crore in the quarter under review.
And the government-controlled Shipping Corporation of India’s consolidated revenue from operations fell nearly 7.5 % y-o-y to Rs 1,338.9 crore in Q2FY26. And despite a 142 % y-o-y jump in the company’s other income to Rs 97.3 crore in the September 2025 quarter, its consolidated net profit fell 35 % y-o-y to Rs 189.2 crore.
Investor outlook: Volatility vs. opportunity
Shipping Corporation of India has recently added two VLCC tanker vessels to its fleet, and in its results presentation, it has highlighted a fleet of 58 vessels with gross tonnage of 2.9 million.
Investors will be clearly keeping a close eye on spot freight rates in the key tanker segment. However, spot freight rates in the tanker segment tend to be very volatile, and are influenced heavily by the US and EU trade policies vis-à-vis Russia, Iran, Venezuela and other leading oil producing countries.
The valuation gap: GE shipping vs. SCI
Before coming to valuations, let’s look at the profitability of the firms. GE Shipping has a return on equity of 14.1% in the current financial year, according to Screener.in, and it is 10.5% for Shipping Corporation of India.
GE Shipping trades at a P/E of 8.5 times, according to Screener.in, and it is 13.7 for Shipping Corporation of India. While in the broader context these multiples may seem low, readers should take note that in the case of a cyclical industry like shipping, a low P/E need not indicate a cheap valuation.
Another metric to look at could be the Price to Book value (PBV). GE Shipping trades at 1x book value, as compared to Shipping Corporation of India which is at 1.29x. For context the 10-year median PBV for GE Shipping and Shipping Corporation of India is 0.7x and 0.5x respectively.
The global shipping industry tends to be quite volatile, despite the steps taken by leading shipping companies to bring stability to operations via long-term contracts.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family do not hold the stocks discussed in this article.
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