GRSE, Mazagon Dock, GE Shipping and other ship building stocks rally up to 10%; here is why

Shares of shipbuilding companies zoomed in Thursday's session as according to sources the shipping industry is likely to get a big boost in the upcoming Union Budget 2024-25.

Here are 10 things to know:

1. At the last count, stocks from the space like Garden Reach Shipbuilders (GRSE) were up over 4 per cent, Essar Shipping up 10 per cent, Mazagon Dock Shipbuilders up 3 per cent and GE Shipping were up over 4 per cent.

2. The shipbuilding scheme, as part of which, the companies receive up to 20 per cent financing may be extended beyond 2026 in Union Budget 2024.

3. To promote "Make in India" policy and to support the shipbuilding industry in India, the Ministry of Ports, Shipping and Waterways introduced Shipbuilding Financial Assistance Policy (SBFAP) scheme for Indian shipyards to procure orders from domestic as well as international market and to be competitive in international market for securing global orders.

4. The scheme offered financial assistance to Indian Shipyards for shipbuilding contracts signed between April 1, 2016 and March 31, 2026 with rate of financial assistance starting from 20% in 2016 and diminishing to 11% in 2026. Nonetheless,  as per the news, the scheme can go to serve beyond 2026 and the pegged financial aid can also remain at 20 per cent.

5. This is to promote shipbuilding in the country and furthemore as per the inputs provided only 10-11 per cent of the budgeted estimated for the scheme has been deployed towards it.

6. Also, there is an expectation around the announcement of the Maritime Development Fund - from which the shipping sector can secure funding at discounted rates. 

7. There can be an announcement of Harit Nauka Scheme in the upcoming budget.

8. The Harit Nauka initiative is a program launched by the Ministry of Ports, Shipping, and Waterways that aims to promote the adoption of greener technologies in inland waterway vessels. It focuses on shifting inland vessels towards sustainable alternatives, such as hydrogen fuel cells, to reduce environmental impact.

9. As part of the scheme, the government plans to provide 1000 green boats with subsidy every year and the scheme is reported to be likely launched in December this year after the announcement in the upcoming budget.

10. Some of the shipping stocks over the past year have generated multibagger returns including Shipping Corporation which has more than trebled investors’ wealth, Essar Shipping (349 per cent return) and GRSE (303 per cent) return.