The GE Shipping scrip has gained more than 94 per cent in the last three months, from Rs 58.80 on August 5 to Rs 114.25 on November 6, The Shipping Corporation scrip is 79.71 per cent stronger, gaining from Rs 73.20 to Rs 131.55, Mercator Lines moved up by more than 50 per cent from Rs 113.80 to Rs 171.05 and Essar Shipping rose 43 per cent from Rs 13.35 to Rs 19.10 in the period.
The shipping sector has gained 65.26 per cent in three months in terms of market capitalisation (m-cap), from Rs 3,876.68 crore on August 5 to Rs 6,406.64 crore on November 6.
The m-cap has increased by more than 147 per cent in the last one year from Rs 2593.66 crore on November 5, 2002 to date.
The rise in the stock prices in the recent past has been attributed to reports that the government will replace corporate tax with tonnage tax for the sector.
This is expected to improve the financials of shipping companies, as it will bring the tax levels down to 1-2 per cent from the current 35 per cent.
The switch to tonnage tax is also expected to attract foreign direct investment (FDI) into the sector. The tonnage tax will be in line with global tax levels and will not disturb the economic policies of other sectors, according to shipping sector analysts.
According to market sources, players have been accumulating shipping stocks in recent times on hopes that the government would switch to tonnage tax during the winter session of Parliament.
The proposed hike in freight rates has also boosted the sentiment for the sector. The overall crude tanker market is also expected to firm up due to the winter demand. The product tanker market may also see improved earnings for the remaining part of the year.
Mercator Lines saw its m-cap surge 626.67 per cent from Rs 12.37 crore on November 5, 2002 to Rs 89.92 crore on November 5, 2003.
In the same period GE Shipping saw its m-cap increase 267.96 per cent from Rs 564.32 crore to Rs 2076.50 crore and Essar Shipping saw a jump of 235.79 per cent from Rs 143.32 crore to Rs 481.25 crore.
