Seamec Profit Plummets in Q2 FY26 on Operational Headwinds

Introduction

Seamec Limited, a prominent player in the offshore logistics sector, reported a challenging second quarter for the fiscal year 2026. The company posted a significant net loss, with revenue declining sharply due to a combination of planned vessel maintenance and seasonal operational hurdles. This performance contrasts with its strategic long-term initiatives, including a major fleet expansion plan aimed at securing future growth and maintaining its market leadership.

Q2 FY26 Financial Performance Breakdown

The quarter ending September 2025 proved difficult for Seamec. The company's revenue from operations stood at ₹107.48 crore, a steep 53.42% decline from the ₹230.74 crore reported in the preceding quarter (June 2025). The impact on profitability was more severe. The company recorded a net loss of ₹25.73 crore, a stark reversal from the ₹75.79 crore net profit in the previous quarter. Similarly, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) fell by 84.66% to ₹17.9 crore from ₹116.7 crore quarter-on-quarter, compressing the EBITDA margin to 16.6%.

Annual Performance Context for FY25

To understand the quarterly results in a broader context, it is useful to review the company's performance for the full fiscal year ended March 31, 2025. On a consolidated basis, Seamec's revenue from operations for FY25 was ₹651.82 crore, marking a 10.63% decrease from the ₹729.29 crore recorded in FY24. The consolidated profit after tax (PAT) for FY25 fell by 27.14% to ₹87.91 crore from ₹120.65 crore in the previous year. The decline was attributed to lower deployment days for key vessels and higher tax expenses under the Tonnage Tax Scheme.

Operational Challenges and Fleet Status

The primary drivers for the weak Q2 FY26 performance were operational. The dry-docking of the Multi Support Vessel (MSV) 'SEAMEC II' took it out of commission, directly impacting revenue generation. Furthermore, monsoon-related delays hampered the deployment of other vessels, leading to fewer revenue days. During FY25, the company's total vessel deployment was 1,454 days, down from 1,594 days in the prior year. The company's fleet comprises seven vessels, including five MSVs, one barge, and one Offshore Support Vessel (OSV), with a significant portion of its business tied to long-term contracts with Oil and Natural Gas Corporation (ONGC).

Strategic Fleet Modernization

Despite the short-term challenges, Seamec is actively pursuing a strategy to modernize its aging fleet. The company has planned a capital expenditure of ₹800 crore in FY26 to acquire two younger vessels, 'Seamec Agastya' and 'Seamec Anant'. This move is critical for ensuring eligibility for future long-term contracts, particularly from ONGC, which has stringent age and technical requirements for vessels. This investment is part of a larger Memorandum of Understanding (MOU) with the Directorate General of Shipping for a progressive capex of ₹1,000 crore, signaling a clear focus on long-term asset quality.

Financial Health and Credit Rating

Seamec's balance sheet remains reasonably healthy. As of the first half of FY26, its consolidated gross debt stood at ₹387 crore. The company's debt-to-equity ratio is low at 0.1796, indicating a conservative capital structure. In a significant vote of confidence, CRISIL upgraded the company's credit rating to 'CRISIL A+/Stable', citing a strong market position and healthy financial risk profile. However, the interest coverage ratio declined to 10.91x in FY25 from 16.19x in FY24, reflecting the pressure on earnings.

Market Position and Key Risks

Seamec holds a leadership position in the Indian MSV segment and is a key contributor to its parent company, HAL Offshore. Its long-standing relationship with ONGC provides a stable revenue base. However, this also creates a significant client concentration risk. The primary uncertainty facing the company is the redeployment risk associated with its older vessels, which may not meet future bidding criteria. The business is also highly sensitive to global crude oil prices, which influence the capital expenditure of major oil and gas companies.

Conclusion

Seamec's performance in the second quarter of FY26 reflects the operational risks inherent in the offshore vessel industry, where maintenance schedules and weather conditions can cause significant financial volatility. While the sharp drop in profit and revenue is a concern, the company's strategic investments in a younger fleet and its strong balance sheet provide a foundation for future stability and growth. Investors will be closely watching the successful deployment of the new vessels and a recovery in operational performance in the coming quarters.