SEAMEC Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Record year, but Q4 shadowed by geopolitics: FY26 delivered highest-ever revenue and profitability, yet the quarter ended with Seamec Paladin stranded in Dubai, pulling revenue out of April-May and clouding near-term visibility.
• 15% top- and bottom-line growth guided for FY27: Management expects buoyant market conditions to persist for another couple of years, though the guidance embeds known headwinds from Paladin's idling and Seamec-II's contract ending in August 2026.
• Two new O&M consortium contracts strengthen backlog: Samudra Sevak and Samudra Prabha, won with Supreme Hydro, run through March 2028 and add long-term revenue visibility, though Seamec's consortium share is only 10%.
• Margin guidance held at 40-42% EBITDA despite Paladin drag: Management confirmed no one-offs in Q4 and maintained the blended margin band, while cautioning that quarterly mix between EPC and IMR work can cause aberrations.
• What to watch next quarter: Whether Paladin gains clearance to leave Dubai by June, the pace of Seamec ANANT's deployment, and any progress on the planned sale of one bulk carrier.

Fleet & Operational Performance

• Highest-ever annual revenue and profitability driven by strong vessel deployment, improved utilization, and disciplined project delivery across domestic and international markets.
• Vessel utilization ran near 100% in Q4, barring off-hires for dry dock, unscheduled breakdowns, and seasonal contract availability.
• Seamec Paladin stranded in Dubai after sailing there for dry dock; the vessel did not operate in Q4 and remains idle through April-May, with possible clarity on a return to work by June depending on the Strait of Hormuz situation.
• Seamec-II contracted only until August 2026, after which a small dry dock is planned and deployment may shift to the spot market depending on conditions.
• Seamec-III performed exceptionally well in FY26 and is expected to continue that trajectory into FY27.
• Seamec ANANT acquisition carries scheduled capex of roughly \$70 million; deployment may take one more quarter due to complications including Paladin's non-operation and ONGC constraints.
• Three owned vessels plus two from the new O&M contracts are due for dry docking during FY27, which will create scheduled off-hire periods.
• UK subsidiary impairment was taken on a prudence basis due to the current geopolitical situation; management called it purely an accounting adjustment, not an abandonment of plans.

Gupta: "We are not reducing our margin guidance. Secondly, there is no one-off in Q4. However, since you have raised this, Paladin is still stuck there. So, for April-May, we are not seeing the revenue from there. Depending on the geopolitical situation, we will be clear for June."

Demand & Pricing Environment

• Market is buoyant and expected to stay so for another couple of years, with charter rates continuing to increase, though management cautioned the pace will not be at a "Hindu rate of growth."
• Diving support vessels are mainly on long-term contracts of 3-5 years where rates remain firm; spot contracts fluctuate with demand and supply, but a large part of the business is protected by these longer-duration charters.
• Demand-supply balance for DSVs is fairly tight, with a shortage of maybe one vessel here and there over a season, though the niche does not require vessels in large numbers like supply vessels.
• No new competitors entering and no pricing pressure observed when bidding for offshore contracts; demand and supply are being matched fairly.
• Seamec Diamond contract renewal could see a rate increase of around 10% to 15% depending on demand and supply, though management did not confirm the renewal increase on this call and stated the current rate is \$8,750 per day with no change from the original declaration.
• Pricing is discovered, not dictated: ONGC charter rates are benchmarked against international charter rates, while EPC and spot market jobs are priced as a package benchmarked against the client's internal estimates.

Mohta: "Yes, market is buoyant and we are seeing that maybe for okay, another couple of years, we will definitely continue to see this buoyancy in the market, where rate will continue to increase. May not be at what we call that it will increase at the Hindu rate of growth."

Contract Wins & Revenue Visibility

• Two significant O&M contracts won in consortium with Supreme Hydro Private Limited: notification of award for MSV Samudra Prabha and Samudra Sevak, both covering 2026 through March 2028, substantially strengthening long-term revenue visibility.
• Samudra Sevak has already been taken over and started working; Samudra Prabha was taken over in May, is currently in Mumbai for changeover, and is expected to start earning its day rate by the first week of June.
• Seamec's share in the consortium is 10%, with subcontracting costs applying; payment is monthly, same as other vessels. Management did not disclose the revenue or profit-sharing arrangement.
• Successful completion of turnkey revamping of ONGC NLM9 platform using MV GOODMAN demonstrated end-to-end offshore execution capabilities.
• Good presence established in Saudi Arabia for almost a year, with both the client and end-client reportedly quite happy with product delivery.
• ONGC appointed British Petroleum as Technical Services Provider for Mumbai High Field, signaling India's intent to enhance recovery from its most strategic offshore basin, which could create future opportunities.

Competitive Position & Strategy

• Seamec is one of the largest ship owners of diving support vessels in India; competitors are typically one- or two-vessel owners, and foreign vessel owners face entry barriers in India due to government protections. All work is obtained on a competitive basis.
• Fleet expansion is deliberate, not aggressive: management will expand only when suitable units are found that add value, citing high capex requirements and the risk of idle assets if growth tapers.
• One of the two bulk carriers, Pearl or Gallant, is being looked at for sale depending on market conditions once the geopolitical situation stabilizes; the other vessel in the pair was sold last year.
• Dubai operations have been pruned with one vessel sold last year; subsidiaries contributed no major revenue in FY26, and the focus remains on the core business.
• International market expansion is aspirational but gated by vessel availability; Middle East demand is expected to rise once geopolitical issues settle, though it is currently paused due to uncertainty.

Mohta: "We definitely are seeing a growth in the market and the shortage is there, but we are definitely not chasing the growth aggressively because these are all high CAPEX items and not the small value. And once the growth tapers down, then it will become a drag on the balance sheet and we do not want to do that one."

India Energy Thesis

• India's energy self-reliance imperative is framed as a structural tailwind: with only 15% in-house production, management argues the country cannot survive without becoming more self-reliant in energy, which will create significant business opportunities for Seamec.
• ONGC's appointment of BP as Technical Services Provider for Mumbai High Field is read as a signal of intent to enhance recovery from India's most strategic offshore basin, potentially driving incremental offshore service demand.
• The two new O&M contracts with ONGC-linked vessels running through 2028 reinforce the thesis that state-directed energy investment is translating into multi-year backlog for domestic vessel operators.

Guidance & Commitments

Key Metrics