- Great Eastern Shipping shares rose up to 2.61% to Rs 1,473 in intraday trade
- Nomura raised target price to Rs 1,995, projecting 39% upside and retained Buy
- Q3FY27 earnings expected strong from high tanker rates and fleet additions
Great Eastern Shipping Company shares were buzzing in trade Thursday, with the scrip rising as much as 2.61% to an intraday high of Rs 1,473 per share.
Around 1:20 pm, Great Eastern Shipping shares were off highs, but continued to trade 1.08% higher at Rs 1,451 apiece. In comparison, BSE Sensex was trading flat with a positive bias at 81,923 level.
This comes after Japanese brokerage Nomura raised its target price to Rs 1,995 from Rs 1,965, retaining its ‘Buy' rating and projecting an upside of 39%.
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The brokerage expects the shipping company to report a strong December quarter (Q3FY27), driven by record-high oil tanker rates in October and the addition of new vessels to its fleet.
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Nomura analyst Bineet Banka said the company's September quarter (Q2FY27) performance was largely in line with estimates, while a sharp increase in vessel prices lifted its net asset value (NAV). The brokerage also believes the stock's current valuation remains attractive, trading at around 0.52 times its ex-cash NAV.
Why Nomura Expects A Strong December Quarter
Nomura expects Great Eastern Shipping to report strong Q3FY27 earnings, largely driven by record-high oil tanker rates in October, although rates have partly moderated in November.
The company is also expected to benefit from the addition of three vessels during the quarter, comprising two bulk carriers and one LPG carrier. While the offshore business could face some pressure due to an idle rig, Nomura expects strong shipping performance to more than offset the impact.
The brokerage believes the normalisation of oil tanker rates in FY28 could be partly cushioned by fleet expansion. Great Eastern Shipping's fleet is expected to increase from 42 vessels currently to 60 by the end of FY29.
Vessel Prices Lift NAV By 18% In Q2
Great Eastern Shipping reported consolidated EBITDA of Rs 1,160 crore in Q2FY27, down 13% sequentially but up 59% year-on-year. The figure was around 1% below Nomura's estimate.
The sequential decline was largely due to lower realised vessel day rates, following a moderation in crude and product tanker time charter yields.
However, consolidated NAV jumped 18% quarter-on-quarter to Rs 2,224 per share at the end of September. The increase was largely driven by a Rs 249 per share contribution from higher vessel valuations and Rs 103 per share from cash profit.
Nomura expects NAV to remain broadly stable in Q3, as the moderation in vessel prices from their September-end highs could be offset by healthy cash generation.
Nomura Raises Earnings Estimates
The brokerage has raised its FY27 and FY28 profit after tax estimates by 11% and 7%, respectively, factoring in slightly higher day rates and a larger fleet.
It also highlighted the company's strong balance sheet, with net cash of around Rs 8,500 crore, equivalent to Rs 594 per share and 41% of its current market capitalisation.
Nomura expects Great Eastern Shipping to deliver an NAV compound annual growth rate of 11.3% over FY26-FY29. It noted that the company had recorded an NAV CAGR of around 27% during FY21-FY26, with nearly 74% of the increase coming from cash profits generated by the business.
The revised target price of Rs 1,995 is based on 0.75 times September 2028 ex-cash NAV. Nomura believes the current valuation of around 0.52 times ex-cash NAV offers an attractive entry point into the shipping upcycle.
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