GESHIP - Great Eastern Shipping Co. Ltd. Share Price

In the earnings call on May 15, 2026, management of The Great Eastern Shipping Company Limited shared a positive outlook, highlighting that they achieved their best-ever quarterly and annual profits, with consolidated net profit surpassing INR 1,000 crores for the first time. The net asset value (NAV) increased significantly, moving from approximately INR 1,100 to INR 1,422 per share in a span of three months. A quarterly dividend of INR 11.70 per share was declared, bringing the total annual dividend to INR 35.10 per share.

Key forward-looking points included:

1. Market Volatility: Management acknowledged the complexities of the market due to geopolitical factors, particularly the closure of the Strait of Hormuz. They noted that rates for tankers spiked due to supply disruptions, although forecasting the market post-normalization remained challenging.

2. Tanker Market Dynamics: Management indicated a strong demand for crude and product tankers, which saw a significant uptick in rates by March and April 2026. They highlighted an order book for crude tankers at around 20% and noted recent asset price increases of 10% to 20%.

3. Strong Cash Generation: The firm emphasized its robust cash generation capabilities, asserting that even during market downturns, cash flow remains strong enough to absorb fluctuations in fleet values.

4. Fleet Management Strategy: Their strategy involves both selling older ships and replacing them with newer ones. They expressed confidence in utilizing their cash reserves efficiently in response to market timing.

5. Offshore Rig Market: The drilling business remains stable, with utilization rates around 84% to 85%. The timing of contracts for rigs was also discussed, with an emphasis on maintaining flexibility to respond to market demands.

Overall, management conveyed a cautiously optimistic approach, prepared for various market scenarios while continuing to leverage their strong cash position and operational efficiencies.

1. Question: "Do you think the markets are likely to pan out in terms of whether these inefficiencies might continue for some time? Or do you think the situation can normalize pretty quickly?"
Answer: The market is unpredictable. The closure of the Strait has caused significant disruption, forcing countries to source cargoes from farther away. If it reopens, there might be a rush of cargoes, increasing demand for ships in the region. It's challenging to forecast these scenarios"”whether it remains closed or reopens significantly affects rates. We stay prepared for both outcomes, leveraging our predominantly spot market presence to capitalize on market strengths as they arise.

2. Question: "Is there a possibility that ONGC comes out with a tender, but due to our short-term engagement, our rigs are not available for those options?"
Answer: Yes, that's a potential risk; however, ONGC typically provides a 180-day notice period for rig availability. Currently, we have rigs that can respond to their tenders, but unforeseen circumstances could affect availability in the future.

3. Question: "In terms of the capacity of crude tankers that are stuck in Hormuz, versus the barrels that have been cut out from the market, do they match?"
Answer: The capacity of crude tankers stuck is about 5%, and product tankers about 2%. However, the impact on cargo availability is greater than these figures suggest, as overall supply disruptions exceed the capacity held up in the Strait.

4. Question: "Are there any updates on the shipyard capacity? Should we expect slippages in the order book?"
Answer: As of now, we haven't seen significant slippages from shipyards. While some delays are possible, current data indicates that shipyard capacities remain stable. The situation is still being monitored, and any developments will be communicated.

5. Question: "Given the rates that we have seen, especially on the product tanker side, have we done any period fixing, or has the time charter not moved as much as the spot rate?"
Answer: The time charter rates have moved but were not aligned with the spot rates, which significantly spiked. As a result, we have not engaged in much period fixing and stuck mainly to the spot market for greater returns.

6. Question: "Is the company considering buybacks now that tax norms have changed?"
Answer: While the tax impediment has been lifted, our decision to buy back shares will depend on market pricing dynamics. We make capital allocation decisions based on valuations and market conditions, ensuring we act at the right levels.