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SCI's Dividend Soars 15-Fold Amidst Trade Disruptions
27 Oct
Summary
- SCI's dividend per share surged 15-fold from FY24 to FY26.
- Tanker division drove significant profit growth in FY26.
- Negative free cash flow in FY26 due to fleet modernization.
Shipping Corporation of India (SCI), India's largest shipping enterprise, has experienced a remarkable 15-fold increase in its dividend per share (DPS) between FY24 and FY26, rising from ₹0.50 to ₹7.50. This dramatic rise in shareholder returns is closely linked to the company's strong financial performance, particularly within its tanker division.
In FY26, the tanker segment's revenue increased by 9.2% to ₹3,942.2 crore, with profits surging by 74.9% to ₹1,189.5 crore. This profitability boost was fueled by elevated freight rates and increased tonne-mile demand, exacerbated by geopolitical disruptions in the Middle East and the Strait of Hormuz blockade.
Despite robust earnings, SCI's free cash flow turned negative in FY26, recording ₹156 crore compared to a surplus in FY25. This was due to substantial reinvestment in fleet modernization, including the purchase of two very large gas carriers, absorbing operating cash flow.
SCI's dividend policy is guided by DIPAM guidelines, mandating a minimum payout of 30% of net profit or 4% of net worth. In FY26, the company's dividend declaration of ₹349.4 crore represented 4.2% of its net worth, exceeding the minimum threshold.
Looking ahead, SCI has entered into strategic joint ventures to expand its fleet, including a pact with major oil companies for tankers and gas carriers, and a stake in Bharat Container Shipping Line. These initiatives aim to capitalize on India's significant maritime freight spend and scale operations without excessive balance sheet leverage.
