SEAMEC Ltd Q1 FY2027 Concall Summary

Key Takeaways

• Strong quarter, fleet-led: Consolidated revenue grew 41% YoY on healthy fleet utilization and efficient execution across domestic and international assignments.
• Paladin disruption is behind the company: The vessel missed Q1 revenue after being stranded in Dubai by the Middle East conflict, but it has returned to India and resumed its contract, so contribution starts in Q2.
• Seamec ANANT is the next growth lever: The HAL Offshore acquisition should close by end of August 2026, and the vessel already holds an ONGC IMR contract expected to deliver 95% to 98% utilization from day one.
• Management is committed to 15% to 20% CAGR over the next 3 to 5 years, with FY27 and FY28 growth supported by newer vessels and higher deployment.
• What to watch next quarter: Whether Seamec ANANT closes and deploys on schedule, whether Seamec III and Princess on-hire talks convert into contracts, and whether the Gallant sale completes in September.

Fleet Operations & Utilization

• Paladin disruption resolved: The vessel went to Dubai for dry dock, but the Middle East conflict started before it could return, so it could not sail back. It incurred costs with no revenue in Q1, but has now returned to India and resumed its contract.
• Monsoon idle period is planned, not a surprise: Seamec Princess works an EPC contract from October to May, so the May-to-October monsoon window is a known idle period. The company is using it for dry docking so there is no revenue loss when the vessel starts working.
• Three vessels off-hire during monsoon: Seamec Glorious (barge), Seamec Princess, and Seamec III remain off-hired during the monsoon period, while Samudra Sevak and Samudra Prabha contracts continue without stopping.
• Seamec II is shifting from IMR to EPC: The charter completes around August end, after which the company intends to deploy the vessel for EPC kind of work instead of IMR work. Talks for deployment are ongoing.
• ONGC O&M contracts carry no fixed capital: Samudra Sevak and Samudra Prabha contribute higher return on capital employed because no capital is employed in terms of fixed cost.

Mohta: "For next 3 to 5 years, we remain quite bullish that DSVs are going to get a strong demand."

Seamec ANANT Acquisition

• Binding agreement with HAL Offshore: Acquisition expected to complete by end of August 2026. The vessel already has a contract with ONGC that will resume after acquisition.
• Deployment timeline: Statutory formalities may take about a month after acquisition, then the contract resumes immediately. Management is hopeful operations start within Q2 FY27 with as much revenue contribution as possible.
• Utilization expectation is high: Since the vessel is in an IMR contract, management expects almost 95% to 98% utilization from the day it starts rolling in the waters.
• No dry dock due: The vessel has no dry dock due, so the only delay is the cooling-off period for statutory formalities.

Gupta: "Since it's in an IMR contract, we would like to say that it should give us almost 95% to 98% utilization from the day it starts rolling in the waters."

Demand Environment & Industry Outlook

• DSV demand is structurally strong: Management remains quite bullish that DSVs will see strong demand for the next 3 to 5 years, because the number of available DSVs is quite low relative to foreseen demand.
• Iran is a potential demand catalyst: If sanctions are lifted, demand will be much stronger because Iran would open up as another new border for offshore activity.
• Middle East remains the key growth market: Saudi Arabia, Qatar, and Abu Dhabi are hotspots. Saudi Arabia is strategically important, and all vessels are currently deployed, so growth capex is needed for incremental business in that area.
• India outlook is medium-term: Andaman and Mahanadi basin discoveries are expected to create opportunities across subsea intervention, diving support, inspection, maintenance, and offshore construction as they progress toward development and production.
• Samudra Manthan impact is years away: The government policy initiative to push oil exploration will take 3 to 5 years to show visible impact for Seamec because oil exploration is a long-gestation activity.

Mohta: "Maybe once sanctions are lifted from Iran, that will be another new border that will be opening up."

Margins & Cost Structure

• Offshore segment margins were materially better than onshore because vessel deployment was higher. The other segment's margins were pulled down because Paladin was not operational and incurred costs during that period.
• Management calls margins "very stable" and attributes this to the nature of IMR and EPC cost fluctuations, including raw material, fuel, geopolitical situation, and economic cycle.
• Cost tracking rule of thumb is not possible: Management stated tracking specific costs may not be possible because EPC works season to season and includes raw material and fuel costs that change with geopolitical situation and economic cycle.
• Margin guidance is 40% to 42%: Management guides investors to track 40% to 42% margins and grow revenues and business to improve bottom line going forward.

Gupta: "Generally, we always guide investors that we should track between 40% to 42% margins, and we should grow our revenues and business, which will help improve the bottom line going forward."

Fleet Growth & Capital Allocation

• Growth commitment is explicit: Management is committed to 15% to 20% CAGR over the next 3 to 5 years, with FY27 and FY28 seeing growth from newer vessels coming in and higher deployment.
• DG Shipping MOU supports fleet expansion: The INR 1,000 crores acquisition target over the next 2 years aligns with the company's intent to grow the fleet, and the MOU was signed knowing well the growth plans.
• Fleet modernization is selective: The company continues to selectively evaluate opportunities that enhance capabilities while maintaining disciplined capital allocation. Nothing to confirm at this point.
• Gallant sale is progressing: Post-shareholder approval, completion is expected in September.
• Bulk carrier liquidation underway: One agreement is already done to liquidate one of the vessels in the Dubai subsidiary. The Pearl vessel is a disputed case with arbitration ongoing.

Gupta: "Management is committed for that number, and we are planning to do every bit in our scope to see that we achieve that growth."

Contract Pipeline & Redeployment

• Seamec III and Princess on-hire talks are advanced: Talks are ongoing and at quite an advanced stage; once finalized, the company will file with the exchange.
• Seamec II deployment talks ongoing: The company intends to use the vessel for EPC work instead of IMR work after its charter completes August end.
• Contract mix is balanced: The company holds a mix of long-term contracts (3 to 5 years) and EPC seasonal contracts (October to May).
• Charter rate upside is not quantified: Management declined to specify any price point, stating demand and supply will determine rates.

Mohta: "As far as the upside on the charter rates are concerned, there is nothing we can specify that, okay, the price will go up to this point or this point. It is always demand and supply."

Governance & Other Updates

• New CFO welcomed: Ashok Verma was welcomed as the new CFO on this call.
• Grant Thornton report is internal: Independent directors had asked GT to examine royalty payments holistically. GT submitted a satisfactory report, which is under consideration from independent directors. The report is internal and will not be shared.
• OSV purchase abandoned: The company has given up on purchasing the OSV, a small supply vessel that does not contribute much to top line or bottom line.
• Seamec II higher rate claim denied: Management denied ever conveying an impression that Seamec II would be hired at a higher rate post August.

Guidance & Commitments

Key Metrics