The world today is riddled with multiple conflicts in different parts of the world, however, global trade is relying on the resilience of the shipping industry for survival and eventual growth. According to the 2023 United Nations Conference on Trade and Development report, despite global challenges like the Russia–Ukraine conflict, this resilience of the shipping industry is expected to contribute to the growth of the maritime trade by 2.4% in 2023 and over 2% annually through 2028. India with its coastline of about 7500n kms and at the heart of global trade is also expected to be part of this growth story which is further emphasised by the government support of this sector. Dive into this blog to learn more about the shipping industry in India and the top stocks in this sector which can be a good investment opportunity.
The top companies belonging to the shipping sector in terms of market capitalisation are mentioned below.
Mazagon Dock Shipbuilders Limited (MDL), established in 1774 in Mumbai, is a leading Indian shipyard. Specialising in defence manufacturing, MDL has built 802 vessels, including 28 advanced warships and 7 submarines. Since 1960, it has constructed a wide range of vessels, from warships to offshore platforms, securing orders worth over Rs. 6,000 crore in 9MFY24.
The trailing returns of Mazagon Dock as of 29th August 2024 are,
Cochin Shipyard Limited (CSL), established in 1972, is a top Indian shipbuilder specialising in constructing and repairing various vessels, including advanced and technologically complex ships like platform supply vessels. With a global reputation, CSL has exported 45 ships and delivered numerous large, small, offshore, and defence vessels. The company also offers marine engineering training and strategic solutions in shipbuilding and repair.
The trailing returns of Cochin Shipyard Limited (CSL) as of 29th August 2024 are,
Garden Reach Shipbuilders & Engineers Ltd. (GRSE) is a leading Indian shipbuilding company under the Ministry of Defence. It mainly builds ships for the Indian Navy and Coast Guard. GRSE is known for being the first shipyard in India to export warships and has delivered over 100 warships. Most of its products are supplied to the government, with a focus on defence services like the Navy and Coast Guard.
The trailing returns of Garden Reach Shipbuilders & Engineers Ltd. (GRSE) as of 29th August 2024 are,
Great Eastern Shipping Company Ltd., founded in 1948, is India's largest private shipping company, owning and operating 43 ships and 23 offshore assets as of FY24. Along with its subsidiaries, GE Shipping is a key player in the Indian shipping and oil drilling services industry.
The trailing returns of Great Eastern Shipping Company Ltd. as of 29th August 2024 are,
Shipping Corporation of India (SCI) is the largest Indian shipping company, specialising in transporting goods and passengers with a diverse fleet, including bulk carriers, tankers, container vessels, and LPG carriers. It also manages vessels for government agencies. SCI was awarded "Navratna" status by the Government of India in August 2008, recognising its significant role in the industry.
The trailing returns of Shipping Corporation of India (SCI) as of 29th August 2024 are,
Essar Shipping Ltd., established in 2010, provides integrated logistics services, including sea transportation, logistics, and oilfield services. The company operates and charters a fleet for both international and coastal voyages, offering comprehensive solutions in the shipping industry.
The trailing returns of Essar Shipping Ltd. as of 29th August 2024 are,
As of 2024, the shipping and logistics sector contributes around 13-14% to India’s Gross Domestic Product (GDP). This highlights the importance of this sector in the growth story of our country and is a significant pillar of the economy. Here is a detailed analysis of this sector along with key highlights.
India relies heavily on maritime transport, with 95% of trade by volume and 70% by value conducted via this route. The Ministry of Shipping, renamed the Ministry of Ports, Shipping and Waterways in 2020, oversees 12 major and 200+ minor ports. Under the Sagarmala project, six new mega ports are planned. India, with a coastline of 7,516.6 km, is the world's sixteenth-largest maritime country. The government supports the ports sector with 100% FDI and a 10-year tax holiday for port projects. In FY24, key Indian ports handled 818 million tonnes of cargo, up 4.45% from FY23, while merchandise exports reached $451 billion.
The Indian Government over the past years has been focusing on building capital infrastructure projects that will strengthen India and root its place as a global hub for development and trade. This includes building various ports and related infrastructure that can support the government’s vision of ‘Developed India by 2047’. Here are a few initiatives taken by the government in this regard,
Budget Allocation - The Interim Union Budget 2023-24 allocated $281.24 million (Rs. 2,345.45 crore) to the Ministry of Shipping. The allocation for the Ministry of Shipping in the Union Budget 2023-24 is $1,813.16 million (Rs. 2,218.74 crore).
Sagarmala Programme - Under the Sagarmala Programme, Rs. 47,166 crore ($5.69 billion) is set aside for 45 projects at non-major ports. Four projects worth Rs. 5,419 crore ($0.65 billion) are completed, 17 projects valued at Rs. 27,673 crore ($3.34 billion) are underway, and 31 projects involve public-private partnerships with a total investment of Rs. 45,973 crore ($5.54 billion).
Syama Prasad Mookerjee Port Revamp - On March 7, 2024, a project worth over Rs. 800 crore ($96.48 million) was approved to upgrade and modernise Syama Prasad Mookerjee Port, Kolkata, including berth reconstruction and mechanisation.
North East Waterways Projects - On February 20, 2024, major waterways projects in North East India were launched, including new terminals and projects worth Rs. 308 crore ($37.14 million) to boost connectivity and economic growth.
Global Maritime India Summit - The Global Maritime India Summit on October 17, 2023, secured Rs. 10 lakh crore ($120.60 billion) in investments over three days, with 360 MoUs worth Rs. 8.35 lakh crore ($100.7 billion) and additional projects valued at Rs. 1.68 lakh crore ($20.26 billion).
Inland Water Transport Goal - The government aims to increase Inland Water Transport's share to 5% by 2030, focusing on its cost-effectiveness for bulk cargo, especially along the River Ganga.
Some of the significant investments in this sector are highlighted below,
The Indian government allows 100% foreign direct investment (FDI) in port construction and maintenance. From April 2000 to September 2023, the port industry received $1.63 billion in FDI.
India plans to invest $82 billion in port projects by 2035 to boost port infrastructure and capacity.
India aims to create a new shipping company to add at least 1,000 ships in the next decade. This move, involving state-run and foreign companies, seeks to cut freight costs and reduce reliance on foreign shipping by one-third by 2047.
On March 15, 2024, Rs. 645 crore ($77.79 million) was approved for 10 new waterways projects on the Brahmaputra River in Assam to improve connectivity, boost river tourism, and aid public transport under the Sagarmala programme.
Adani Group plans to invest $3 billion over 3-5 years to expand global port capacity, focusing on Europe, Africa, and Southeast Asia. The goal is to increase revenue from overseas ports and support the India-Middle East-Europe Economic Corridor. Adani Ports aims to become the largest private port company by 2030 and achieve carbon neutrality by 2025.
Paradip Port in Odisha became India's largest major port by cargo volume, handling 145.38 million tonnes in FY24. This achievement surpassed Deendayal Port in Gujarat, driven by improved operations and increased shipping traffic.
The shipping sector in India is poised for significant growth and modernisation, supported by substantial investments and strategic initiatives. India plans to enhance its maritime capabilities over the coming years through significant investments and participation from the private sector boosting its trade and defence dominance across the globe.
This article was a brief snapshot of the shipping industry in our country and the top stocks belonging to this sector. Let us know if you need more details about this sector or information on stocks mentioned here.
Till then Happy Reading!
Marisha Bhatt is a financial content writer @TrueData.
She writes with the sole aim of simplifying complex financial concepts and jargon while attempting to clarify technical and fundamental analysis concepts of the stock markets. The ultimate goal is to spread vital knowledge and benefit the maximum audience. Her Chartered Accountant background acts as the knowledge base to help clarify crucial concepts and create a sound investment portfolio.
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