Seamec - Play On Increased Offshore Activities: Anand Rathi

Anand Rathi Report

For updates on its business and prospects we met the Seamec Ltd.'s management. The company is set to capitalise on its dominance in domestic offshore activities given its long-standing relation with exploration and production majors like Oil and Natural Gas Corporation Ltd. It is confident of ~15% earnings growth over the next few years led by-

1. higher contract day rates and

2. new vessel additions.

It is replacing three ageing vessels, as new-age norms of 25 years come into force by Feb-26. Net debt/equity of 0.1 times offers room for fleet expansion, given revived exploration after a decade of low crude-oil prices globally.

Risks:

1. lower than expected contract rates;

2. increased competition from foreign players;

3. higher than expected cost of acquiring additional assets.

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