About the Shipbuilding Industry
Shipbuilding, i.e. building vessels to traverse oceans seas, plays a crucial role in global trade and security. Inputs for the industry include steel, machinery, energy, and communication systems. Additionally, shipbuilding fosters innovation in areas like navigation, propulsion, and sustainability.
Civilian uses encompass mammoth container ships, efficient tankers, and luxurious cruise liners, driving international trade and tourism. Meanwhile, defence shipyards churn out warships, submarines, and coast guard vessels to safeguard maritime borders and ensure stability. Steel plates, timber, engines, and specialised equipment form the backbone of any ship.
India, with its skilled workforce and growing technological prowess, aims to become a major player in this field. The government presently supports the shipbuilding industry in India via the Shipbuilding Financial Assistance Policy (SBFAP) scheme to help Indian shipyards procure orders from domestic and international markets. In 2018-19, in terms of tonnage delivered, India’s private and public sectors accounted for 86.6% and 13.4% respectively. India currently has 28 shipyards, six under the Central Public Sector, two under state governments, and 20 in the private sector.
Future Outlook of the Shipbuilding Industry
Nurturing and growing the shipbuilding industry is a part of India’s Maritime Vision 2030. India currently contributes to 1% of global shipbuilding. In the coming decade, it plans to reach the top 5 list in this industry. At a global level, people are looking for alternatives to China and other demographically weakening countries like Japan or South Korea, offering an opportunity for India.
Having domestically owned ships will save billions of dollars in freight charges for the domestic exporters and importers and improve India's overall foreign exchange deficit. India is also developing the ‘Green Tug Transition Programme’ (GTTP) that will convert all tugboats in the country, i.e. vessels helping ships navigate to ports, into ‘Green Hybrid Tugs’, running on non-fossil fuel like Methanol, Ammonia, Hydrogen. It is a part of India’s plan to become the ‘Global hub for building Green Ships’ by 2030.
Things To Consider Before Investing in the Shipbuilding Sector
- Prioritise Profitability: Companies that are able to remain profitable should be preferred. Remember, external factors, like the costs of raw materials such as steel and power, environmental regulations, etc., can impact profitability in the shipbuilding sector. Check for usage of technology for operational efficiency.
- Financial Fitness: In detail, individual companies' financial health. Go for companies with adequate cash flow, and capital efficiency to assess their operational strength.
- Competitive Landscape: Map the major players in the Indian shipbuilding market and their market shares. Check which ones are competitive enough in terms of technology used, operational efficiency and access to capital.
- Align with Your Goals: Consider your investment timeframe and objectives. Shipbuilding is not a sector where revenue comes in every week.
How To Invest in Shipbuilding Sector Stocks?
Investing in shipbuilding sector stocks via Angel One is easy. Simply follow these steps:
- Log in to your Angel One account.
- Click on the search icon and look for your desired shipbuilding sector stock.
- Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
- To complete your transaction, click on the ‘Buy’ button.
If you don’t have a Demat account with Angel One, you can open one for free online within minutes.
