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SEAMEC Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤5th Feb 26

Summary : Seamec Limited achieved record Q3 FY26 performance with highest vessel deployment and profitability, driven by strong market conditions and strategic asset additions, while planning for continued growth despite minor operational risks.

Management Perspective positive : In summary, this was our strongest quarter to date, reflecting disciplined execution, improved asset utilization and a favorable industrial environment. We remain confident of sustaining growth momentum yearly.

Concall Report Analysis & Insights

Business Overview

  1. Achieved highest ever vessel deployment in company history during Q3 FY26.
  2. Reported best ever quarterly revenue and profitability in Q3 FY26.
  3. Completed turnkey revamping of ONGC's NLM9 platform ahead of schedule.
  4. Seamec III commenced Pipeline Replacement Project and DSF II projects.
  5. Seamec Agastya began operations with ONGC after successful dry docking.

Future Growth Prospects

  1. Expects sustained growth momentum yearly, driven by strong industrial environment.
  2. Anant vessel acquisition to complete in Q4 FY26, deployed in Q1 FY27 for growth.
  3. Signed MOU for INR1,000 crores investment in new vessel acquisitions over 2-3 years.
  4. Strategic shift towards higher-margin IMR contracts for year-round deployment.
  5. India's expanding refining capacity and liberalized E&P framework support long-term energy investment.

Management Insights

  1. The environment for charter rates is expected to remain steady for some time.
  2. Management is focused on bringing growth to shareholders through new vessels.
  3. Company aims to optimize returns for stakeholders by evaluating older vessel operations.
  4. Q3 was an exceptionally well quarter, partly due to the Goodman vessel contract.
  5. We are confident in strengthening our performance in the years to come.

Signs of Skepticism

  1. Anant vessel acquisition has been delayed since Q3 FY25, now expected Q1 FY27.
  2. Historically, strong quarters have been followed by weaker ones, suggesting volatility.
  3. Management advises investors to focus on year-to-year growth rather than quarter-to-quarter.
  4. Exceptional Q3 performance partly due to a specific vessel contract (Goodman) which may not recur.
  5. Breakdowns are part of machinery operations, with risk element added to charter rates.

Risk Factors

  1. Seamec Paladin is undergoing dry dock for 2 months in Q4, impacting revenue.
  2. Seamec Diamond also planned for dry dock in Q4, affecting profitability.
  3. Three additional vessels scheduled for dry dock in FY27, potentially during monsoon.
  4. Vessel breakdowns can occur, though current issues have been addressed.
  5. New ONGC exploration blocks will take 4-6 years to commercialize for vessel scope.

Good To Know

  1. India's government is investing USD100 billion and expanding refining capacity to 300 MMTPA.
  2. Indian Oil Corporation plans to increase refining capacity to 98 million tons in 18 months.
  3. ONGC and Reliance Industries signed MOU to share offshore resources for efficiency.
  4. Seamec's net debt is currently zero or negative.
  5. DG Shipping guidelines do not impose age restrictions on diving support vessels in India.

Key Drivers

  1. New vessel deployments drive revenue growth.
  2. Strong charter rates expected to sustain.
  3. Increased IMR contracts boost profitability.
  4. India's energy sector investment expands opportunities.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. Oil demand projected to remain above 100 million barrels per day until 2040.
  2. India is a key destination for long-term energy investment due to economic growth.
  3. Increased exploration activity is good for business, but commercialization takes years.

Financial Highlights

  1. Q3 FY26 consolidated revenue increased 138% YoY to INR331 crores.
  2. Consolidated EBITDA rose to INR150 crores in Q3 FY26 from INR34 crores.
  3. Consolidated PAT was INR100 crores in Q3 FY26, up from a loss last year.
  4. 9-month FY26 consolidated revenue grew 42% YoY to INR670 crores.
  5. ROCE and ROE stood at 15% and 16% consolidated, respectively.

Product Composition

  1. Company is inclined towards IMR contracts for higher margins and year-round deployment.
  2. Two older vessels are kept for EPC business, providing good top-line despite monsoon off-hire.
  3. New assets are acquired with an assumption of IMR contracts for profitability.

Strategic Considerations

  1. Anant vessel acquisition is delayed due to various approvals, including ONGC.
  2. MOU with DG Shipping involves INR1,000 crores investment for new vessels.
  3. Funding for new vessels will be a mix of internal accruals and debt, decided case-by-case.
  4. Management aims to increase Seamec's share of business from parent company HAL.
  5. Agastya acquired for $23 million, funded by internal sources and INR850 crores debt.
SEAMEC Ltd (SEAMECLTD) Concall Report Analysis & Insights | Dhanarthi