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As on 06-May-2024  11:19

CRISIL upgrades ratings of Seamec to 'A+' with 'stable' outlook

CRISIL stated that the upgrade factors in a revision in the credit rating of the parent company, HAL Offshore as well as expected improvement in the business risk profile of Seamec.

The rating takes comfort from the healthy business risk profile of Seamec backed by its established market position in this industry, in terms of providing multi support vessels (MSVs) on charter-hire basis under long-term contracts to offshore exploration and production (E&P) players in India.

Revenue has continued to grow at healthy compound annual growth rate (CAGR) of 9% over fiscals 2019-2023, supported by growth in revenue days (led by vessel additions) and higher deployment rates of vessels owned; as business prospects remain healthy amid continued focus on oil E&P activity in India.

The company reported 58% on-year growth in revenue to Rs. 493 crore during the first nine months of fiscal 2024, with operating margin maintained at approximately 31%.

To comply with regulatory requirements of replacing an aged fleet as well as to increase its fleet size, over the past three years, Seamec replaced one aged vessel with three new ones, with plans to replace two more aged vessels over the next 3-4 years.

This transition towards having more younger aged fleets will further mitigate redeployment risks with E&P players and reduce maintenance costs.

The financial risk profile remains strong, supported by healthy cash accrual, despite capital investments to be undertaken to replace the aged fleets. In the near term, the company plans to replace aging vessels with newer ones, requiring capital expenditure of approximately Rs 250-300 crore, to be funded through internal accruals.

These strengths are partially offset by the moderate scale of operations and exposure to client concentration risk.

Seamec operates in two distinct verticals of the shipping business - offshore support vessels & services and bulk carrier charter business. The company owns six vessels and one barge in the offshore support business wherein the vessels are deployed in the domestic and international market.

The company had reported a consolidated net profit of Rs 56.16 crore in the quarter ended December 2023 as against net loss of Rs 1.77 crore during the previous quarter ended December 2022. Net sales surged to Rs 213.31 crore in Q3 FY24 from Rs 100.68 crore in Q3 FY23.

The scrip fell 1.28% to currently trade at Rs 1074 on the BSE.

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