Shipping stocks in good waters

A rare year-end spike in global freight rates is reshaping the risk–reward for Indian shipping and shipbuilding names such as Great Eastern Shipping, Shipping Corporation of India (SCI), Chowgule Steamships and Cochin Shipyard. Daily earnings on key crude routes are up about 467% this year, while rates for LNG carriers and bulk commodity ships have risen more than fourfold and roughly twofold, respectively;  an unusually strong finish to the year that is being driven by conflicts, sanctions and longer sailing distances, rather than demand alone.

For crude and product tanker owners, the backdrop is the most constructive in years. Red Sea disruptions have forced vessels to route around the Cape of Good Hope, sharply lifting “ton-miles”, while sanctions on major Russian producers have pushed more Asian refiners toward Middle Eastern barrels.

Great Eastern, with a balanced fleet of crude/product tankers and dry bulk carriers, is already trading close to the top of its 52-week range (current price around Rs 1,100 versus a high of Rs 1,181), on the back of strong recent profits and a still-reasonable P/E of about 8.7 times.

SCI’s tanker division remains its largest profit contributor even as overall Q2 FY26 revenue fell 8% year-on-year and bulk/liner earnings softened, suggesting that a sustained tanker upcycle could support group profitability despite weakness elsewhere. The global shift toward longer-haul voyages has also meant some Indian refiners are now chartering two smaller ships instead of a single VLCC to secure timely Middle East crude deliveries, which indirectly tightens regional tonnage and supports rates in segments where Indian owners are active.

On the dry bulk side, a benchmark index for grain and ore carriers has hit a 20-month high as markets position for new iron ore supply from Guinea and contend with weather-related congestion off China. This is positive at a cycle level for smaller bulk-exposed players like Chowgule Steamships, but the stock’s profile is very different from the larger names: it is a sub- Rs 100 crore micro-cap with modest revenues, low historical returns on equity and a high trailing P/E near 80–90 times, after a one-year price decline of over 20% despite the stronger freight environment. For investors, Chowgule looks more like a high-beta, illiquid satellite play on bulk freight than a core holding, with company-specific risks potentially overshadowing the macro tailwind.

Cochin Shipyard sits on the other side of the same cycle. While it does not earn freight directly, a cash-rich owner community and rerouted trade are underpinning demand for newer, more efficient ships. The yard has just secured India’s first global order for six LNG-powered feeder container vessels from CMA CGM, worth about Rs 2,000 crore, and its Udupi subsidiary has bagged multiple international dry-cargo contracts from Norwegian clients – all of which give several years of revenue visibility. However, the market has already rewarded this order book: Cochin Shipyard’s stock trades at roughly 7.4 times book value, with a 52-week high of Rs 2,545 versus a current level near Rs 1,630, making execution, margins and future export wins critical if the valuation is to be sustained in the event freight-driven newbuilding appetite cools.

The common thread across these Indian names is that today’s set-up is cyclical and geopolitically driven, not a structural reset in demand. Industry analysts warn that if Red Sea hostilities ease and ships return to Suez routes, container and tanker rates could fall sharply from current levels, while a wave of new deliveries ordered during this spike would add to future pressure.

In that context, Great Eastern and SCI offer relatively clean exposure to the current earnings upcycle in tankers (with differing degrees of diversification and PSU overhang), Chowgule represents a niche, high-risk way to play dry bulk, and Cochin Shipyard is effectively a leveraged bet on owners recycling today’s windfall into tomorrow’s greener fleets. The opportunity is real, but classic shipping discipline still applies: focus on balance-sheet strength, fleet mix and contract cover as much as on eye-catching spot rate charts.