Nature of the Disclosure

This document contains the transcript of the earnings conference call held on August 04, 2026, to discuss the financial results for the quarter ended June 30, 2026 (Q1 FY27). The call was hosted by management, including Executive Director and CFO Mr. G. Shivakumar and General Manager Mr. Rahul Sheth.

Key Financial Figures and Highlights

  • Record Profit: The company reported its most profitable quarter ever. Consolidated profit stood at INR 1,309 crores, while stand-alone profit was INR 1,157 crores.
  • Earnings Per Share: The consolidated profit translates to approximately INR 91-92 per share.
  • Net Asset Value (NAV): Stand-alone NAV increased to INR 1,512 per share. Consolidated NAV was just short of INR 1,900 per share, an increase of about INR 100 per share.
  • Dividend: The company announced its 18th consecutive interim dividend of INR 14.40 per share, its highest-ever quarterly dividend.
  • Cash Position: The company is net cash and has been for almost 4 years. Gross cash balance is $700 million, and net cash (after debt) is $600 million.
  • Debt: The last debt maturity is in November 2028.

Market Conditions and Operational Performance

  • Tanker Markets: Freight rates reached all-time highs due to disruptions in the Strait of Hormuz, which caused significant trade pattern dislocations and a large increase in ton-mile demand.
  • MR (Medium Range) Tanker spot market earnings were close to $50,000 per day.
  • LR2 Tankers saw vessels switching to carry crude (Aframax trade) due to a significant earnings gap.
  • Bulk Carrier Markets: Earnings were strong, slightly better than the previous year, supported by strong grain trade and some switching from LNG to coal for power generation.
  • LPG Markets: Markets were very strong, with freight rates in excess of $100,000 per day. Most of the company's vessels are on fixed-rate time charters.
  • Asset Prices: Asset prices increased across all segments by 5% to 10% during the quarter.
  • Order Book: The global order book has increased dramatically:
  • Crude Tankers: 27%
  • VLGCs (Very Large Gas Carriers): 35%
  • Product Tankers: 20-21%
  • Bulk Carriers: 14% (up from 10-12%)
  • Offshore (Jack-up Rigs): Global utilization remains stable. Rigs temporarily suspended by Saudi Aramco are slowly returning to work.

Fleet and Strategy Update

  • Fleet Composition: The company operates 40 ships (average age 14.5 years), 19 offshore vessels, and 4 rigs.
  • Fleet Strategy: The strategy is to replace, not expand capacity. The company will wait for attractive asset prices to ensure long-term returns.
  • Recent Transactions (Last 4 months):
  • Sold 2 MR tankers and replaced them with 1 MR tanker.
  • Bought 1 Kamsarmax dry bulk carrier.
  • In July: Sold the LR2 tanker Jag Lokesh and replaced it with the LR2 tanker Jag Lakshya, which is 6 years younger and an eco-ship.
  • Market Exposure: The company is predominantly on the spot market, with about 25-26% of capacity on time charter.
  • Quarterly Coverage (Q2 FY27): As of the call (40% into the quarter), coverage levels were:
  • Crude Tankers: 46% covered (reflects fixed days, not utilization)
  • Product Tankers: Coverage not specified in detail
  • Supply Vessels: ~90% covered
  • VLGC Repricing:
  • Two repricings occurred in the last 3 months. One new charter includes a base rate plus profit-sharing on spot market upside. The other was repriced at 25-30% higher than the previous rate.
  • One VLGC charter comes up for repricing in early 2027 (Q1).
  • Rig Repricing: Three rigs were up for repricing in the second half of the year. A 3-year contract has been secured for one rig, leaving two to be repriced.
  • Idle Rig: One rig has been idle since the end of April 2026. The company is in discussions for short-term business, with deployment expected after the monsoon season.

Capital Allocation and Outlook

  • Buyback Framework: Management confirmed that the regulatory and tax disadvantages for buybacks have been removed. Any decision will be treated as a capital allocation choice, evaluated against other options like buying ships, with no set target price or multiple.
  • Capex Philosophy: The company emphasizes investing counter-cyclically. It invested INR 1,200 crores in fleet modernization last year and INR 300 crores in Q1 FY27. In July, a further INR 250-300 crores was invested. The focus remains on value-accretive transactions rather than expansion at current high asset prices.
  • Incremental Cash Flow: A question was raised about using incremental quarterly cash flow (which is significant) to fund additional ship acquisitions (1-2 per quarter) while preserving the core cash war chest. Management acknowledged the point but reiterated its disciplined, long-term approach focused on threshold returns and avoiding investments at cycle peaks with no margin of safety.
  • Government Policy (Samudra Manthan): Management sees potential positive impact from the government's offshore focus but will wait for tangible on-ground demand (tenders) before considering any specific capex plans for the offshore business.

Other Key Points from Q&A

  • Fuel Efficiency: Newer eco-ships (post-2013) can offer fuel savings of 20-25% compared to older vessels, translating to $1,000-$2,500 per day in higher earnings.
  • Revenue Spillover: A INR 50 crores revenue spillover occurred from Q4 FY26 to Q1 FY27. Spillover for the current quarter is not significant.
  • Current Freight Rates: As of the call, product tanker rates are significantly lower than in Q1. Aframax rates are significantly lower, Suezmax rates are around the same or slightly lower, and bulk carrier rates are marginally higher.
  • Strategic Petroleum Reserves (SPR): Discussion noted drawn-down inventories in the U.S. (from 750M to 300M barrels) and uncertainty around China's reserves, indicating potential future demand for securing barrels.
  • Trade Routes: Structural changes in trade routes (e.g., Russian oil to Asia, Venezuelan crude to East) are providing long-haul support. The permanence of these changes depends on geopolitical outcomes.
  • Treasury Strategy: Company cash is held in bank deposits (dollar balances) and Indian debt funds or bank deposits (rupee balances). It holds no U.S. treasuries.