Transport Corporation Of India - Enters Into An Agreement To Buy Two New Ships: Motilal Oswal

Capacity addition to boost earnings in this high-margin segment.

<div class="paragraphs"><p>TCI Seaways a sea cargo division by Transport Corporation of India Ltd. (Source: Company website)</p></div>
TCI Seaways a sea cargo division by Transport Corporation of India Ltd. (Source: Company website)

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Motilal Oswal Report

Transport Corporation of India Ltd. has entered into an agreement to buy two new ships of ~7,300 metric tonne each for a consideration of $34 million (~Rs 2.7 billion). Transport Corporation of India currently has six ships with a total capacity of 77,957 mt. These new ships would add another 14,600 mt to the total capacity.

The agreement has been jointly entered by Transport Corporation of India and a consortium of sellers led by Nakanishi Shipbuilding Co. Ltd of Japan. According to the agreement, the seller will construct, launch, equip, finish, and initiate operations for two cellular container vessels with a Dead Weight Capacity of ~7,300 mt each. These vessels are slated for delivery on or before June 30, 2026. The funding would be through internal accruals and debt.

Transport Corporation of India has been actively seeking to augment its fleet of ships for nearly a year, given its optimal utilisation of the existing ones.

This addition will enable the company to increase its shipping capacity and meet the growing demand. The Seaways segment is the highest margin segment for the company, and the additional capacity will contribute to an overall improvement in profitability.

As these will be new ships, their lives would be 25-30 years at least, thereby placing Transport Corporation of India well to capitalise on the opportunities in this space.

Click on the attachment to read the full report:

Motilal Oswal Transport Corporation of India Update.pdf
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