Great Eastern Shipping Company Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Great Eastern Shipping Company Ltd (GESHIP) Q2 FY23 Earnings Concall

Management Update:

• [00:01:12] GESHIP said it declared its best-ever quarter of profits. The company finished 2Q23 with more cash than debt and is has zero net debt currently.

Q&A Highlights:

• [00:15:47] Amit Khetan from Laburnum Capital asked about the main 2-3 risks that GESHIP is most mindful of that could take freight rate on a sustained basis to the levels of 2021. Bharat Sheth MD said that GESHIP doesn’t believe it should happen again. It all depends on the level of possible demand destruction on recessionary fears.

• [00:17:38] Abhishek Nigam of B&K Securities asked about EU’s plan to impose price cap on Russian oil and eventually move away from Russia. Bharat Sheth MD answered that GESHIP is now at a 90% plus utilization level, for crude and petroleum products. So with this utilization, even slightest uptick in demand or trading pattern can lead to meaningful uptick in freight rates.

• [00:24:20] Abhishek Nigam of B&K Securities enquired that on the offshore side, which saw good improvement on revenue, if there was any one-offs.  Bharat Sheth MD replied that GESHIP received a lumpy insurance claim and that money has come in, in 2Q23. However, the company added that excluding the one-time income/expense there’s lot more optimism in the sector also.

• [00:29:10] Vaibhav Badjatya of HNI Investment asked that in which trades GESHIP tankers are currently deployed. Bharat Sheth MD said that sometimes they get deployed into India, sometimes internationally. But broadly, about 75% of GESHIP revenue comes from international trades.

• [00:30:59] Vaibhav Badjatya of HNI Investment enquired that if the company wants to increasingly deploy its fleet for imports from Russia. Bharat Sheth MD answered that the company haven’t done any trade from Russia since the declaration of war. Also, GESHIP has no intention to do anything at this stage.

• [00:31:44] Himanshu Upadhyay of O3 Capital asked about the dividend philosophy going forward. Bharat Sheth MD answered that broadly it won’t change and the company will keep paying out dividends as long as markets remain strong.

• [00:39:34] Himanshu Upadhyay of O3 Capital enquired if GESHIP is still trading in handysizes and if it’s looking for opportunities on that segment.  Bharat Sheth MD said it’s not a no, as shipping is about uncertainty. Currently, the company’s thinking is to go for the larger sizes.

• [00:41:15] Rajesh Khattar enquired how much lower is the time charter rate vs. spot rate in tankers. Bharat Sheth MD answered that the time charter rate all depends on the duration. The longer the duration, the steeper the backwardation.

• [00:47:11] Rajesh Khattar asked about the tanker rates in October and November vs. July to Sept. Bharat Sheth MD replied that Oct. and Nov. till date, on the crude side it is stronger. On the product side, in smaller ships it’s a little weaker and on bigger product tanker it’s a little stronger.