SEAMEC Ltd Q3 FY2025 Concall Summary

Key Takeaways

• A trough quarter, but management calls the bottom: Revenue fell 36% YoY to ₹139 cr and PAT swung to a ₹3 cr loss, driven by idle time on Swordfish and a Seamec II breakdown. Management states "the worst is behind us" and guides for all vessels deployed in Q4.
• Two vessel acquisitions set to reshape FY26: The \$70 mn Seamec Anant (from parent HAL Offshore) and the NPP Nusantara (with a contract in hand) are both expected to close in Q2 FY26, adding EPS-accretive capacity and setting up FY27 for a full-year contribution.
• Swordfish secures a lucrative charter, but details were guarded: A 2-year contract in Saudi Arabia was signed at \$78,000 per day, a rate management calls "very good and lucrative," though they declined to disclose it in presentations, citing competitive sensitivity.
• Forex MTM loss masks underlying improvement: A ₹14 cr non-cash MTM hit from USD and GBP loan revaluation swung PAT negative; overseas losses narrowed from ₹43 cr to ₹10 cr YoY for 9M, and management expects the GBP impact to reverse.
• What to watch next quarter: Whether Q4 delivers the promised full deployment and revenue recovery, the final closing timeline and funding mix for the Anant acquisition, and any contract award for the idle Seamec Princess.

Q3 Performance: The Trough

• Revenue collapse was vessel-specific, not systemic: Consolidated revenue fell 36% YoY to ₹139 cr because Seamec Swordfish sat idle between contracts (charterer's scope was delayed) and Seamec II suffered an unexpected breakdown. Management had forewarned of these delays in the Q2 call.
• Seamec Diamond impact was negligible on revenue: Though Diamond deployed only 42 of 92 days, its OSV day rate is minimal compared to the main DSV fleet, so the idle time hurt only repair and maintenance cost, not the top line.
• Overseas losses are shrinking steadily: The overseas entities posted a ₹10 cr loss in 9M FY25, down sharply from ₹43 cr in 9M FY24. The residual loss is driven by interest and depreciation in Seamec UK, with interest eliminated on consolidation. Management aims to turn consolidated profitability green in coming quarters.
• Forex hit is a book entry, not a cash drain: A ₹4.5 cr impact came from USD term loan revaluation (INR 85.05 to 87.1) and ₹9.4 cr from GBP loans to the UK subsidiary (INR 110.17 to 104.44). Management is confident the GBP movement will reverse, and since all contracts are dollar-denominated, currency appreciation benefits the company longer-term.

Vinay Agarwal: "This was only a book entry. In fact, what happened, we have dollar loan in our books, term loan in our books, in which case, the dollar moved from INR85.05 to INR87.1. So there is a difference of INR2.05, which give us an impact of INR4.5 crores."

Fleet Expansion: Anant & Nusantara

• Two vessels arriving in Q2 FY26: Seamec Anant, a newbuild DSV being acquired from parent HAL Offshore for \$70 mn, and NPP Nusantara, an existing vessel under a signed purchase agreement with delivery expected July/August, both target completion in Q2 FY26.
• Nusantara comes with a contract in hand: Management states it will be EPS-accretive from day one, adding immediately to both top line and bottom line.
• Anant targets 17% ROCE: Management projects approximately 17% return on capital employed from the Anant acquisition in the years ahead, justifying the \$70 mn price tag in a market where even second-hand vessels command \$50–55 mn.
• Funding mix leans on promoter equity: The promoter has agreed to take part equity against the Anant consideration up to the limit of his shareholding, with the balance funded through internal accruals and debt. Peak debt is not expected to exceed ₹500 cr next year, with repayment in the subsequent year from projected cash flows.
• PEARL acquisition is on pause: Management is rethinking the deal due to issues with the seller, removing one vessel from the near-term pipeline.

Sunil Gupta: "Today, a second hand vessel market is very tight. And even a second hand vessel is available in the range of \$50 million to \$55 million... So this is a new brand vessel and we have considered the best market rate while transferring this asset."

Fleet Status & Contract Visibility

• Swordfish is back on charter at a strong rate: The vessel has been partly repaired and resumed work with the charterer at a reduced rate (discussions ongoing), while a new 2-year contract in Saudi Arabia at \$78,000 per day is set to start between 15–31 March 2025.
• Seamec III and Princess operate on spot/EPC contracts: Unlike the long-term charters on other vessels, these two work on shorter EPC contracts, typically running only in the non-monsoon season. Seamec III is already working with Asian Energy Services; Princess is in advanced stages for a contract award.
• FY26 visibility is strong barring one vessel: Most vessels are running as per their contracts; only the Barge lacks clear deployment. Swordfish is expected to run the full year next year, and Nusantara/Anant will contribute for part of FY26 before a full year in FY27.
• Two old work boats likely to retire: When their contracts come up for renewal, management will prefer to bid directly through Seamec rather than acquire them, simplifying the fleet.
• Dry docking is planned and factored in: Seamec Paladin and Seamec II are likely to go into dry dock, with the downtime already built into contract schedules.

Sunil Gupta: "Udit, While I appreciate your question, please understand that we putting these numbers on presentation is like giving everything to our competition."

Market Opportunity & Long-Term Demand

• India's largest offshore bid round is a structural tailwind: The government has launched OALP-X with 25 offshore blocks covering 1.91 lakh sq km. As exploration activity ramps up, the benefits will trickle down to offshore service providers like SEAMEC over time.
• India's energy demand underpins the thesis: The country's projected growth to a \$4 trillion economy and continued reliance on fossil fuels, particularly natural gas, creates sustained demand for offshore operators.
• International expansion is exploratory, not imminent: The UK office setup for Europe and Africa has been delayed by procedural issues, and management will "keep exploring" the Southern Arabian and Gulf markets if profitable opportunities arise, but no concrete timeline was given.
• ONGC Eastern Coast remains an active bidding target: The company will bid for new scope of work when ONGC releases it and will inform the market accordingly.

Naveen Mohta: "It is a long-term story, but it is an exciting story that, okay, there are growth potential, continue for the company. It is not that company will stagnate somewhere or something like that, no."

Balance Sheet & Capital Allocation

• Peak debt capped at ₹500 cr, with rapid deleveraging planned: Management is confident of generating sufficient cash flows in FY26 and FY27 to repay debt, with peak borrowing not exceeding ₹500 cr next year.
• Promoter consolidation signals commitment: The promoter's agreement to take equity against the Anant consideration, and the transfer of the vessel from parent HAL Offshore into SEAMEC, is framed as a deliberate move to consolidate all operations into one entity and demonstrate growth conviction to the market.
• Future acquisitions remain on the radar: The balance sheet is described as healthy, and management continues to look for suitable vessel acquisition opportunities or new contract bids during the year.
• Director change was a conscious upgrade: Mr. Rajeev Goel (parent company representative) was replaced by Mr. Subrat Das as non-executive director to strengthen management and operational excellence, not due to any specific dispute.

Naveen Mohta: "This shows our conviction and commitment of the promoter to consolidate all the operation at 1 entity so that we can focus and we can show the growth to the market."

Guidance & Commitments

Key Metrics