Shipping Corporation of India: Net Profit Up 205%, P/E at 6x

SCI Shipping Corporation of India (NSE : SCI) is a government-controlled company operating tankers and dry bulk vessels for crude oil, petroleum products and dry commodities. It declared an interim dividend of Rs 4 per equity share with its Q2FY27 results, record date November 16. It paid Rs 7.5 per share for FY26. What happened: In Q2FY27, consolidated revenue rose 71.2% year on year to Rs 2,290.7 crore. Net profit grew 205.4% to Rs 577.8 crore. SCI outgrew private-sector peer GE Shipping, which reported 47% revenue growth and 118.4% profit growth. SCI likely had a larger share of fleet capacity on spot freight rates in the quarter. Why it matters: Tanker spot freight rates surged 4 to 5 times year on year in Q2FY27 due to US-Iran tensions in the Strait of Hormuz. VLCC spot rates averaged $296,940 per day, up from $51,465, and Suezmax averaged $243,588 per day. The 205.4% profit growth illustrates the operating leverage available when a tanker fleet is heavily exposed to spot rates in a rising freight cycle. What I am watching: SCI has not provided detailed operational data for the quarter. The key variable is what proportion of its fleet remains on spot rates as the cycle potentially turns. US mid-term election results raised the prospect of a US-Iran de-escalation, which could sharply reduce spot freight rates in coming quarters. My stance: SCI trades at 6 times consolidated P/E, a premium to GE Shipping at 4.7 times. Over 5 years, SCI's P/E has ranged between 3.9 and 23.7 times. ROE is 15%, just below GE Shipping at 15.9%. The government ownership adds execution uncertainty that the modest premium over GE Shipping does not compensate for. I do not hold a position in Shipping Corporation of India at the time of writing. This is not investment advice.