SEAMEC Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Challenging monsoon quarter, recovery expected: Q2 was disrupted by weather, a technical breakdown on SWORDFISH, and visa delays, but management expects operations to improve as chartering picks up and the full fleet is now operational.
• Fleet expansion commitment of INR800 crores: The company has committed significant capital for fleet expansion, supplementing the INR500 crores spent two to three years ago, signaling a clear growth posture.
• SEAMEC Agastya adds contracted, high-return backlog: The new vessel is scheduled for a December 2025 deployment on a four-year ONGC contract at USD25,000 per day, with an expected IRR upwards of 20%.
• Overseas losses are shrinking toward breakeven: Cumulative losses in overseas operations halved from INR56 crores to INR28 crores, with management guiding to a near-breakeven position next year.
• What to watch next quarter: The mobilization of SEAMEC Anant by February 1st, the deployment of SEAMEC Agastya, and the pace of chartering activity now that the monsoon has ended and SWORDFISH is operational.

Fleet Operations & Vessel Status

• Monsoon and deployment restrictions: The majority of vessels were unable to work during the challenging monsoon quarter due to weather and deployment restrictions, suppressing revenue.
• SWORDFISH breakdown and recovery: The vessel suffered a technical breakdown in mid-August after a brief on-hire period with ARAMCO, working only 21-22 days in the quarter. All defects are now rectified and the vessel is fully operational in the field.
• SWORDFISH visa delay: The vessel’s contract was supposed to start in April 2025, but deployment was delayed until July due to visa restrictions imposed by the Saudi government, compressing its working window before the breakdown.
• Crew costs without revenue: Employee costs increased because SWORDFISH had a full crew deployed and ready even while the vessel was not earning revenue, creating a margin drag.
• Seamec Glorious contract restructured: The current 150-day firm charter with L&T is on a day rate basis for the barge and crew only, without diving services. This makes the current day rate of ~USD22,000 incomparable to the prior ~USD75,000 rate, which included high-cost diving services.
• Penalty structure on contracts: Contracts, particularly with ONGC, include penalty clauses for breakdowns ranging from 20% of charter hire up to 2.5x, depending on the severity. The primary financial loss, however, is the lost revenue when a vessel is not working.

Vinay Agarwal: "In this contract, which we have entered with L&T, we are providing only barge along with crew. That's it. So, this is the difference."

Growth Strategy & Fleet Expansion

• INR800 crores committed for fleet expansion: Management highlighted a new commitment of INR800 crores for fleet expansion, following an INR500 crore capex cycle two to three years ago, positioning the company as a buyer, not a seller, of vessels.
• SEAMEC Agastya acquisition: The company has taken delivery of SEAMEC Agastya, which is scheduled for deployment from December 2025 on a four-year contract with ONGC through HAL Offshore at a day rate of USD25,000, with an expected IRR upwards of 20%.
• MoU with DG Shipping for INR1,000 crores: An MoU was signed to invest approximately INR1,000 crores in the maritime business, leveraging new government benefits. The exact number of vessels, type, timelines, and funding patterns are still in the preparation stage.
• Leasing vessels ruled out: Management stated that leasing vessels from other companies to meet market demand is not financially feasible due to unattractive returns after accounting for conditions and contingencies.
• Fleet upgrade ambition: Over the next five years, the company aims to acquire new vessels to upgrade fleet age, targeting higher revenues and better margins, though specific plans remain under consideration.
• Acquisition economics: Management’s acquisition strategy targets deals where a 3- to 5-year charter can pay back roughly 50% of the total capital, leaving a vessel with significant remaining life and value at the end of the contract.

Sunil Gupta: "We are the buyer of fleet today, we are not the sellers of fleet."

Market Position & Demand Environment

• Dominant market position: Management stated the company is the only multi-support vessel owner with a fleet in India and the biggest in the Asia-Pacific region.
• Services tied to production, not exploration: The company provides services to oil fields that are already extracting oil, where extraction continues regardless of oil price fluctuations, insulating it from exploration-cycle volatility.
• Charter rate sensitivity to oil prices: Charter rates increase with higher oil prices and decrease with lower ones, but the impact is minimal and not proportional; rates are more dependent on the type of services provided.
• Margin improvement driven by mix and fleet age: Post-COVID margin improvement is attributed to higher charter rates, a strategic shift toward higher-margin IMR contracts, and a younger fleet with four relatively new vessels that incur lower repair and maintenance costs.
• Northern Europe market entry: A liaison office in the U.K. is now expected to be operational by September 2026, targeting the Northern Europe offshore market, which management describes as highly lucrative in terms of charter hire rates.

Rajeev Goel: "I am the only multi-support vessel owner with a fleet in India and the biggest in Asia-Pacific."

Financial Health & Costs

• Overseas losses halved: Cumulative losses in overseas operations were reduced from INR56 crores to INR28 crores, with management guiding for a further reduction to INR5-7 crores this year and a breakeven to positive position from next year onwards.
• SWORDFISH revenue shortfall: The vessel worked only 21-22 days in Q2, generating insufficient revenue to cover its deployed crew costs, creating a direct drag on quarterly profitability.
• Dry dock schedule visibility: SEAMEC-3 and SEAMEC Princess are scheduled for dry dock in 2026, with SEAMEC Paladin going in at the end of January 2026 after a six-month extension. SEAMEC-2 is scheduled for 2027, with SWORDFISH and Nusantara following in 2028. Dry docking is a 90-day exercise every 2.5 years.
• SEAMEC-2 life extension under review: The vessel’s contract was renewed until February 2026. A decision on whether to dry dock and charter it again beyond 2026, or scrap it, is yet to be made and is under internal discussion.

Guidance & Commitments

Key Metrics