Views and recos on shipping stocks: GE Shipping, Bharti Shipyard, SCI

During the recent slowdown and a decline in global trade, the shipping industry witnessed a steep downfall in profitability but as the situation improves, the industry sees some hope. In the last seven months, shipping stocks outperformed benchmark indices, posting an average return of 82% against 55% given by the Sensex. With the revival in the global economy, the sector should attract high investments. SundayET takes a peek into the recommendations of top brokerage houses

LARGE CAP

Eastwind Capital Advisors & Invest Shoppe India

GE SHIPPING CMP: Rs 241

The current fleet stands at 37 vessels, comprising of 31 tankers and 6 dry bulk carriers. The company plans a capital expenditure of $1.2 bn over the next three years and has plans to acquire eight ships and an oil drilling rig. Great Eastern Shipping is planning to raise about Rs 700 cr by selling minority stake of its offshore services subsidiary Great Ship.

SHIPPING CORP OF INDIA CMP: Rs130

It is the largest shipping company in India with operating fleet size of more than 60 vessels carrying around 5 million dwt (deadweight tons). It has larger exposure in the tanker segment, which accounts for around 75% in terms of dwt. Also, good dividend history and high current dividend yield of around 4.5% offer downside protection.

MID CAP

SMC Wealth Management Services & Invest Shoppe India

MERCATOR LINES CMP: Rs 48.15

This H K Mittal group company is a provider of sea-borne transportation services in India and overseas. Its consolidated net profit went up by around 31% during FY09. It has carved a niche for itself in the area of coastal trade by opening new avenues of transportation of molasses from Surat and minor ports in Ratnagiri.

VARUN SHIPPING CMP: Rs 54

It provides a comprehensive shipping solution across the entire hydro-carbon product chain, including LPG, crude oil and offshore sector. Given its major presence in niche and less volatile LPG segment and increasing presence in offshore segment, we remain positive on the company.

SMALL CAP

Invest Shoppe India & Eastwind Capital Advisors

SEAMEC CMP: Rs 203

It provides underwater engineering and construction, maintenance, inspection of under water structures, rescue operations and fire fighting and other support services for offshore oil and gas installations located in India or abroad. The balance sheet of the company is very robust and it is a debt-free company.

BHARATI SHIPYARD CMP: Rs 158

Its core activity is designing and repair of various types of sea vessels . The group is into an open offer battle with ABG Shipyard to acquire additional stake of up to 35% in Great Offshore. Its order book stands at Rs 5,060 cr where Rs 280 cr is pending execution. Huge orders from defense are expected in the next six months.