The listed shipping companies, whose assets are skewed towards tankers, are largely being valued by the market in tandem with the current soft global freight rates for crude and liquid petroleum products. SCI, GE Shipping, and Mercator Lines - the top three players in this space - lost between 1.5 per cent and 33 per cent in the last one month because of continuing softness in the tanker rates in the current quarter. Essar Shipping, however, is the only gainer for its delisting plan. (A section of market players is expecting that SEBI would ask the promoters to make an open offer even as the delisting is proposed to be done through an EGM). However, on weekly basis, all the stocks are in the green. Industry analysts said two things are changing the valuation dynamics of the shipping stocks. The first reason is that all the Indian shipping companies are in asset acquisition mode. The second reason was that the international dry bulk rates have been showing signs of going up in the current quarter, an industry insider said.
Observers felt that as the new-built (5-10 years of age) assets have not seen correction in their prices in tune with freight rates, it is being assumed that earning potential of the global shipping companies is protected in a tightly balanced demand and supply situation for ships hire. It is further expected that though the crude freight rate outlook remains uncertain for now, dry bulk rate increase may soon get into an upward cycle leading to greater tonnage acquisition by the local companies.