GE Shipping delivered impressive first quarter results with consolidated EBITDA rising 110% year-on-year to ₹1,327 crore in Q1FY27, driven by a sharp rise in shipping freight rates amid global trade disruptions. According to latest reports, average Suezmax rates more than tripled to $143,000 per day in the June quarter from Q1FY26, while freight rates for other segments rose by 70-180%. The company's revenue increased 66.9% to ₹2,005.36 crore from ₹1,201.5 crore in the previous year, with EBITDA margin expanding to 66.7%. The shipping segment remained the key earnings driver, with segment profit rising to ₹1,155 crore from ₹379 crore a year earlier. The company also declared an interim dividend of ₹14.40 per share.
Brokerage firm Nomura has retained its 'buy' rating on Great Eastern (GE) Shipping Company Ltd. with a target price of ₹1,965 per share, citing the company's strong cash pile as a key source of funding for the next leg of fleet growth. According to The Financial Express, the brokerage projects an upside of 28% from the stock's current price. Nomura described GE Shipping as a consistent compounder in a deep cyclical business with strong capital allocation capabilities. The brokerage expects annual operating cash flow generation to remain strong at ₹3,800-4,900 crore over FY27-29, with plans to add 10 vessels each in FY28 and FY29. Nomura analyst Bineet Banka highlighted that the stock trades at a discount to its net asset value (NAV).
The company maintains a robust financial position with ₹8,000 crore in cash as of Q1FY27, representing 30% of its net asset value (NAV) and 38% of market capitalisation. As reported by CNBC TV18, this substantial cash reserve can potentially be used to double the existing fleet once the shipping cycle turns negative. The company's net debt-to-equity ratio has improved dramatically from 0.12 times in FY22 to negative 0.45 times, demonstrating strong balance sheet management. GE Shipping's NAV clocked a 27% compound annual growth rate (CAGR) across Financial Year 2021-2026, driven by operating cash flow generation of 13% CAGR and increased asset values. The brokerage noted that GE Shipping has historically demonstrated disciplined capital allocation, buying vessels when asset values were depressed, selling assets during stronger markets, maintaining low leverage and returning surplus cash to shareholders.
GE Shipping operates a fleet of 40 vessels, comprising 25 crude oil and product tankers and 15 dry bulk carriers, along with offshore services through four oil rigs. According to The Financial Express, Nomura expects the company's fleet to expand from around 40 vessels currently to 62 by FY29, including additions across crude, product and dry-bulk carriers. With only about 25-26% of the company's tonnage operating under time charters currently, GE Shipping has a vast presence in the spot market, benefiting from the surge in freight rates. The company's strategy includes buying and selling assets in the second-hand market to improve fleet age profile, as demonstrated by selling a mid-sized oil tanker in Q2FY27 and replacing it with a similar vessel that was six years younger. The company has also announced a buyback of 5.9 million shares, or around 4% of outstanding shares, at a maximum price of ₹1,530 per share.
GE Shipping shares have risen about 40% so far this year and are up 19% in the last one month, with the ongoing share buyback programme contributing to the strong performance. As reported by The Financial Express, the stock has gained 15% in the last month and 9% in the last six months. All three analysts covering the stock have 'buy' recommendations, with Nomura having the highest target price among them. The stock is currently trading at ₹1,540.90 per share on the NSE, with the strong performance attributed to the global shipping market remaining in a strong upcycle due to disruptions in local trade flows caused by the Russia-Ukraine war and West Asia conflict. The stock's valuation is considered undemanding at about 6x earnings of twelve months ending June. Nomura projects freight rates to drop by 50% for oil tankers and 10% for others in FY28, estimating GE Shipping's EBITDA to drop at a slower 19% after 55% EBITDA growth in FY27.
