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Why Shipping Corporation Share Price is Falling

Apr 3, 2023

Why Shipping Corporation Share Price is Falling

Since the beginning of the year, markets have been under pressure. From the Adani-Hindenburg saga to the recent global banking crisis, events continued to worry investors.

As a result, share price of many companies was under pressure and Shipping Corporation of India is no exception to this.

In the past month, Shipping Corporation's share price has fallen by 25.2%. And in the last two days, the stock has fallen by 22%.

Let's take a look at why the company's shares have taken a beating.

Demerger of Shipping Corporation

Last year, Shipping Corporation of India (SCI) filed a request with the Ministry of Corporate Affairs (MCA) for the proposed demerger scheme. Under this scheme, all the non-core businesses of SCI would be transferred into a separate company named Shipping Corporation of India Land and Assets.

The demerger ratio was 1:1.

MCA issued the final order on 22 February 2023 approving the demerger of the non-core assets of the SCI into a separate company.

After this, the board of directors of the company at its meeting held on 20 March 2023 fixed the record date for the demerger of its non-core assets.

The effective date for the demerger was 14 March 2023, while the record date for the demerger of the company was 31 March 2023.


As per the demerger, the existing shareholders of SCI, as on 31 March 2023, will be allotted one share of the newly demerged company (Shipping Corporation of India Land and Assets) in exchange for every share held in SCI.

That means if you hold 100 shares of the company, you get 100 shares of the new company in the demerger.

This results in a drop in the share price. This is because assets which once belonged to the parent company are removed from the parent company's books, which lowers its book value.

As a results, the share price of Shipping Corporation of India fell.

Why did the government of India decide to demerge the Shipping Corporation of India?

As per the government, this was not a core business and did not justify the government being involved init. Hence, the government decided to exit this business.

However, it sold only the shipping business it would like to adopt a separate strategy for the sale of non-core assets, especially the ones with development potential.

The demerger also allowed the government of India to part with its non-core business and still have a control on its assets.

How Shipping Corporation share price has performed recently

In the past one month, shares of Shipping Corporation are down around 24%. On a YTD basis, Shipping Corporation is down 37.1%.

Shipping Corporation has a 52-week high of Rs 151.3 touched on 20 December 2022 and a 52-week low of Rs 86 touched today on 22 June 2022.

About Shipping Corporation

The Shipping Corporation of India is a government corporation that operates and manages vessels servicing both national and international lines. It is under the ownership of the Ministry of Shipping, Government of India, with its headquarters in Mumbai.

To know more about the company, check out Shipping Corporation financial factsheet and quarterly results.

You can also the compare the company with its peers:

Shipping Corporation vs GE Shipping

Shipping Corporation vs Dredging Corporation

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Which are the top shipping companies in India?

Based on marketcap, these are the top shipping companies in India:

You can see the full list of shipping stocks here.

And to filter the best quality stocks from the shipping sector, check out Equitymaster’s Indian stock screener. This screener also allows you to screen stocks based on your own criteria.

Which are the top gainers and top losers within the shipping sector today?

Within the Shipping sector, the top gainers were SEAMEC (up 4.0%) and SHIPPING CORP (up 2.9%). On the other hand, MERCATOR (down 1.2%) and ABAN OFFSHORE (down 1.0%) were among the top losers.

How should you value shipping companies?

Investing in stocks requires careful analysis of financial data to find out a company's true worth. However, an easier way to find out about a company's performance is to look at its financial ratios.

Two commonly used financial ratios used in the valuation of stocks are -

Price to Earnings Ratio (P/E) - It compares the company's stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.

Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.

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