Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Seamec Ltd (BOM:526807, Financial) reported a 12% year-on-year increase in revenue for Q2 FY25, reaching INR110 crore.
- EBITDA for the quarter grew by 26% year-on-year, indicating improved operational efficiency.
- The company achieved a profit after tax of INR0.2 crore, a significant improvement from a loss of INR14.5 crore in the same quarter of the previous year.
- Seamec Ltd (BOM:526807) maintains a strong financial position with a net cash of INR78 crore after adjusting for borrowings.
- The company is well-positioned to capitalize on growth opportunities in the offshore services sector, with ongoing projects and partnerships with major clients like ONGC, Aramco, and ADNOC.
Negative Points
- The company's deployment rate was only 51% in Q2, indicating underutilization of its fleet during the monsoon season.
- Margins have declined year-on-year due to lower deployment during the monsoon season, affecting profitability.
- There is uncertainty regarding the repricing of contracts, as new tenders are yet to be finalized, which could impact future revenue.
- The company faces challenges from geopolitical uncertainties and regulatory changes in the oil and gas industry.
- Seamec Ltd (BOM:526807) has experienced delays in contract renewals, which may impact financial performance in Q3 FY25.
Q & A Highlights
Q: With half of the DSV and barges split now on new contracts, how does management expect the repricing of three more vessels in FY25?
A: The repricing will occur as contracts conclude and new tenders are issued. Given the market's upward trend, we anticipate an increase in rates when these tenders are finalized.
Q: Can you provide an update on any new vessels to be added?
A: We are continuously exploring opportunities for acquiring new vessels. As soon as a viable opportunity arises, we will disclose it to the exchanges.
Q: What is the average contract duration for DSVs, and how has the shift to higher rates affected the topline in FY25?
A: The average contract duration ranges from three to five years, with some shorter-term contracts. The shift to higher rates has positively impacted our topline, though each contract's structure varies.
Q: Could you share the utilization rate or operating days for the past quarter?
A: Utilization rates can be inferred from our stock exchange filings. For Q2, we achieved a deployment rate of 51%.
Q: What is the expected payback period for the OSV segment, and how do its margins compare to the DSV segment?
A: The payback period typically ranges from five to seven years. We aim for a payback within this timeframe to ensure a sound investment decision.
Q: Can you update us on the status of the OSV business and any technical issues?
A: The OSV vessel is now ready after undergoing necessary repairs. It will soon be redeployed under contract.
Q: What are the levels needed for growth to achieve a target ROC of 18% to 20% by FY26?
A: Our current ROC is 14%, and we are focused on profitable growth and financial prudence to achieve our target by FY26.
Q: How does the company plan to address the seasonal weakness observed in the September quarter?
A: The September quarter is typically weaker due to monsoon seasonality. We aim to mitigate this by securing year-round contracts, particularly in diving support services, to reduce volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
