GE Shipping, Shipping Corporation shares surge amidst Iran-Israel conflict; Here's why

Shares of Shipping Corporation of India Ltd. (SCI) and GE Shipping Ltd. gained 5% and 3% respectively on Friday, June 13, bucking the trend in an otherwise weak market. The stocks are among the top and few gainers on the Nifty 500 index today.

Stocks have surged after Israel launched precise and pre-emptive attacks on Iran's nuclear program in the early hours of Friday, resulting in the deaths of many commanders and scientists, a news confirmed by Iran's Supreme Leader Ayatollah Khamenei.

The Baltic Dry Index, a benchmark for the price of moving the major raw materials by sea, has risen nearly 50% in the last one month, and 34% of that surge has only come in the month of June. The index was up 9% on Thursday.

Analysts mentioned that GE Shipping could be a play on the rising tensions in the Middle East, as 50% of the company's fleet comprises of oil and product tankers.

"Tanker rates should firm up if the conflict persists or spreads as ships will avoid the Middle East," the analysts said, adding that Iran exports 2 million barrels per day of oil, which is significant, as it is 2% of global supply.

GE Shipping shares are trading at a 35% discount to its Net Asset Value, with nearly 40% of the market cap as cash, along with positive free cash flow and a minimum of ₹2,000 crore cash generated per annum, according to the analysts.

Only two analysts have coverage on GE Shipping, and both have a "buy" recommendation on the stock. No analyst has coverage on Shipping Corporation.

Shares of GE Shipping are trading 2.5% higher at ₹999, having risen 11.6% in the last one month. Shipping Corporation of India shares are trading 5% higher at ₹218.9, and has risen 25% in the last one month.