SEAMEC Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Earnings surge on operational mix, not volume: Consolidated EBITDA jumped 45% YoY to ₹117 crores, driven by a better operational mix and charter hire arrangements rather than a step-change in revenue, which grew 4% YoY.
• Fleet renewal is the structural story: Old vessels with near-zero book value are being systematically replaced by younger tonnage on long-term charters, a shift that is already compressing maintenance costs and smoothing revenue lumpiness.
• Middle East beachhead is real and expanding: SWORDFISH secured a two-year redeployment with Saudi ARAMCO, validating the company’s credibility in a market management calls one of the toughest for compliance, and rates are described as very good.
• Management fees under formal review: Grant Thornton has been appointed to produce a comprehensive related party transaction report, with the report expected in coming weeks; management says it will act on any recommendation to curtail fees.
• What to watch next quarter: Whether the Nusantara acquisition closes on schedule in August, the Grant Thornton report’s findings on management fees, and whether Q2 monsoon quarter stays breakeven as promised.

Fleet Operations & Efficiency

• Seamec Princess season extended: The vessel completed Pipeline Replacement Project VII and transitioned directly into Project VIII and the Daman Upside Development Project, finishing on 17th June versus a projected 30th May and generating 18 additional revenue days.
• Seamec 2 dry dock accelerated: The dry dock was completed well before the planned 30th September timeline, with the vessel expected back in the field by 10th September, saving roughly 20 days of downtime.
• Fleet efficiency at 93%: The entire fleet achieved a 93% efficiency factor during the quarter, reflecting high utilisation across deployed vessels.
• Seamec 3 delivered consistent returns: The vessel continued generating returns through an extended charter hire period signed via addendum on the original BIMCO Charter Party agreement.
• Seamec Diamond insurance claim closed: A full and final insurance settlement for prior maintenance-related breakdowns was received as other income in Q1, with no further claims outstanding.
• Younger fleet, lower maintenance: Running younger vessels is producing a continuous downward trend in maintenance costs, a structural tailwind as the fleet mix shifts toward newer tonnage.

Rajeev Goel: "This vessel completed its season on 17th June 2025 against the projections of 30th May 2025, thereby generating revenues for additional 18 days in the quarter."

Fleet Renewal & Acquisitions

• Old-for-new replacement underway: Seamec 2, Seamec 3 and Seamec Princess may run out of operation within the next five years and are being replaced by newer vessels: Seamec Paladin, Swordfish, Nusantara and Seamec Anant. The book value of the old vessels is almost nil.
• Nusantara acquisition timeline: The sale transaction is expected to complete in August 2025, followed by a mandatory dry dock of roughly three months, with deployment targeted from December 2025 onwards.
• Seamec Anant acquisition timeline: Shareholder approval has been received and the transaction has commenced; completion is expected by October 2025.
• Long-term contract visibility: Once Nusantara and Anant are acquired and put to use, they will have approximately three to four years of remaining contract period, adding to an order book where the rest of the fleet is already on long-term charters for the next two to three years.
• All vessels deployed: Every vessel currently in a deployable state is deployed, and the order book has expanded with the new vessel contracts.

Middle East Expansion

• SWORDFISH redeployed with Saudi ARAMCO: After completing a 15-month charter, the vessel has been redeployed for a further two years, cementing the company’s presence and credibility in Saudi Arabia and the UAE built over the last two years.
• Targeting the Gulf oil fields: The company is actively looking to expand its fleet to have more vessels operating across Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman.
• Cost advantage as moat: Management argues that Indian cost of services is cheaper while maintaining the same quality, standards and credibility, backed by 25 years of experience in diving charter vessels and a core team intact for 20 years.
• Five-year vision: The stated plan is to add more diving support vessels to the fleet to expand the Middle East presence, with the next five years framed as a period of execution and consolidation.

Rajeev Goel: "And that's a very big achievement because that is one of the toughest markets in terms of compliance and vessel maintenance and the rates are very good."

India Position & Competitive Dynamics

• Bombay High secured for four years: The entire Bombay High oilfield is owned and operated by ONGC, and Seamec is totally secured for the next four years with ongoing tenders.
• Number one on the East Coast: Management claims the company holds the top position in terms of preference and credibility from customers on the East Coast, where Seamec 3 was deployed last season and is deployed again this season.
• Deepwater diving not on the table: The company is primarily an air diving and surface diving operation; deepwater diving requires different capex and strategy planning and is not being pursued given ample opportunities in the current operating envelope.
• Technology adoption gated by customer willingness to pay: Management stated that operational efficiency gains from technology are secondary to whether the customer is ready to spend more money for the service.

Rajeev Goel: "Deepwater diving is a totally different ball game. It requires a different capex planning, strategy planning. And as such, the field in which we are operating, we see a lot of opportunities. So that is not on the table right now."

Subsidiaries, JVs & Governance

• UK subsidiary restructuring: Loans to the UK subsidiary have been converted into redeemable preference shares via expert opinion and Board approval, stopping the interest outflow. The operating loss was ₹2.5 crores in March 2024 numbers, and part of the investment will be brought back to India once the development project is complete.
• UK office to target North Sea: The UK entity is being set up as a global office to explore opportunities in the North Sea, North Europe and allied areas, though no timeline was given for commencement of operations.
• GIFT City JV with Arete Shipping: A 50% equity joint venture has been formed for a cargo vessel on a bareboat charter, a model that carries no operational risk for Seamec. Arete brings work through its experience and contracts in bulk carriers where Seamec’s presence is not significant.
• Tunnel project JV exited: The EPC construction and infrastructure project done for L&T has been withdrawn after 80% completion; the project is over for Seamec and was described as a significant experiment.
• Grant Thornton review pending: The firm has been engaged to produce a comprehensive related party transaction report; the study is complete and the report is expected in the coming weeks, with a commitment to share it with investors. Management says it will take appropriate steps if the report recommends curtailing management fees.

Rajeev Goel: "The fees that we are paying to MMG is well within the market benchmark. In fact, it is lower than the mean of the market. ... And I am very hopeful that Grant Thornton in its report will definitely vouch what we are trying to get here."

Q2 Seasonality & Risk

• Monsoon quarter is a breakeven exercise: Q2, spanning the last week of May through September, sees minimal fleet deployment. Revenue is very minimal while costs remain, and management’s stated focus is to remain breakeven and not incur losses.
• Management declines to give guidance: When asked for revenue and margin guidance for FY26 and beyond, management explicitly refrained, noting the business is quite volatile and pointing analysts to research reports instead.
• Contract pricing front-loads margin: For long-term charters of two to four years, the charter hire is fixed for the duration; inflation and cost increases are accounted for at bidding by using an average price spread over the period, with margins higher in the early years.
• Seamec 3 rate correction: Management clarified that the average day rate for Seamec 3 last season was \$50,000 per day, not the \$2,800/\$2,000 figure that appeared in a presentation, which was described as a typographical error. Similar rates are expected in the coming season.

Rajeev Goel: "If you see quarter 2 numbers in any of the past five years, so the revenue is very minimal. The cost is almost there. And that is a quarter where the company's maximum focus is to remain breakeven, not to incur any losses in the quarter."

Guidance & Commitments

Key Metrics