Seamec

Mumbai headquartered SEAMEC Limited (South East Asia Marine Engineering & Construction Limited) operates in the offshore oilfield industry, undertaking ongoing sub-sea inspection, repair, maintenance and light construction required for support of offshore oil production. In Q3FY14, company reported strong revenue and profitability, thanks to higher utilization of vessels, securing reasonable charter rates and effective cost control at its end. While third quarter sales stood at Rs. 126 crore, EBITDA was Rs. 40 crore and PAT Rs. 30 crore, leading to EPS of Rs. 8.9.

Besides being debt free, company has a cash balance of Rs. 100 crore, leading to cash per share of Rs. 30. Thus, its enterprise value is only Rs. 128 crore, leading to EV/EBITDA of 1.7 times, on historical numbers. Due to dry dock expenditure of Rs. 39 crore in Q2FY14 (Nil during FY13), the second quarter bottomline was a severely hit, with negative earnings of Rs. 66 crore. Thus, although nine months FY14 sales stood at Rs. 271 crore, EBITDA was reduced to only Rs. 2 crore and net loss to Rs. 30 crore for 9MFY14. Going forward, company expects to rationalise expenses further and increase charter rates, to strengthen its working, coupled with higher deployment for the 5 vessels. Management is hopeful of repeating Q3 performance in the future quarters, which will be big positive for its financials.