Shipping Corporation of India Ltd Q3 FY26 Earnings Analysis

- SCI targets to double to triple (2x to 3x) its existing top-line revenue over the next five years (by FY 2028-29). (Page 15) - The JV formation with BPCL, HPCL, IOC, and others aims to support this growth by adding around 59 new vessels in the next five years, including VLGCs, VLCCs, and offshore vessels. (Pages 10, 11, 15) - The revenue from managed ships currently is around INR 84 crores but does not contribute directly to SCI's topline. Growth will come from owned newer, more efficient vessels. (Page 10) - Newer ships, typically 5-8 years old compared to current fleet aging 15+ years, are expected to generate better revenue rates and higher utilization. (Page 11) - Bulk carrier and offshore segments show signs of recovery with improving market conditions (e.g., BDI index), contributing positively to revenue in coming quarters. (Page 18)

- SCI targets to double to triple (2x to 3x) its existing top line over the next five years (FY '25-'30) with an operating margin target of 50% (Page 15, 13). - The newly formed JV with BPCL, HPCL, and IOC aims for better margins due to more efficient, younger vessels and firm cargo commitments, contributing to improved profitability (Page 13). - IRR for vessels under the JV is targeted above 10-11%, supporting positive earnings growth (Page 11). - Despite some segment margin volatility, margins have largely held steady after accounting for ECL provisions and forex impacts, with improvements noted in bulk carrier and technical & offshore segments (Page 18). - SCI is optimistic yet prudent about future growth, emphasizing expansion in fleet size (including 10-12 vessels planned for FY '26-'27) and strengthened market positioning, especially in energy transportation (Pages 15, 3).

- **Acquisition Plan**: SCI is holding cash for acquisition of vessels; ready to deploy funds whenever favorable deals arise. - **Joint Venture (JV) Investment**: SCI will hold 50% shareholding in a new JV with BPCL, HPCL, and IOC. Equity and funding will be shared proportionally. - **Fundraising**: SCI plans to raise funds over the next few years for expansion and acquisition, partly through debt (typically 70% borrowed, 30% own money). - **Vessel Acquisition Targets**: Plans to float tenders for new construction vessels starting December 2025, aiming for 8-10 new ships operational by next year and ordering roughly 10-12 vessels for FY 2026-27. - **JV Vessel Fleet**: MOPNG aggregated demand for 59 vessels over next 5 years to be inducted via JV. - **Strategic Focus**: Government support and Ministry monitoring are strong to expedite approvals, financing, and shipbuilding in India under Atmanirbhar Bharat initiative.

- SCI is planning significant fundraising for the acquisition and expansion involving 59 vessels under a new joint venture (JV). - The JV will have 50% shareholding by SCI, with other partners holding the rest (40% by IOC, BPCL, HPCL and 10% from the Maritime Development Fund - MDF). - SCI expects about INR 15,000 crore required for this acquisition, which will be funded partly through existing cash reserves and additional fundraising. - Fundraising could involve a combination of equity and debt; about 70% of investment is typically borrowed, with 30% as equity from SCI. - SCI is open to bringing in strategic or financial partners for equity participation (10%-20%). - The JV entity may raise funds independently in the market, but SCI will be liable for its 50% share. - The Government of India (via MDF) is expected to contribute about 10%. - Cash reserves are being held specifically to enable swift acquisitions when opportunities arise.

- The JV incorporation target timeline is December of the current year. - Tender floating for new construction vessels is expected in December next month. - New vessel orders will be placed definitely, with deliveries expected roughly over three years. - Second-hand vessels will also be inducted into the JV and should be visible in operation by next year. - For FY ’26-’27, SCI plans to tender for approximately 10 to 12 vessels. - Concurrently, SCI alone is also purchasing some second-hand vessels. - The demand aggregation is for 59 vessels under the JV with BPCL, HPCL, and IOC. - The JV will decide the order and timing of vessel procurement and deployment over approximately five years.