Concall AI

ABS Marine — Q4 FY25 earnings call

Call held 3 Jun 2025

Management summary

ABS Marine Services Limited reported a strong performance for FY25, with consolidated total income reaching ₹184.31 crores and net profit of ₹27.25 crores. The company secured over ₹350 crores in new long-term contracts and expanded its fleet with two DP2 platform supply vessels, with a third expected in Q1 FY26. Management highlighted significant H2 growth driven by new contracts and vessel upgrades, and anticipates improved top lines and higher EBITDA margins of 60-65% on new contracts in the coming year.

Highlights

Consolidated FY25 total income was ₹184.31 crores.
Consolidated FY25 EBITDA was ₹54.64 crores, with an EBITDA margin of 29.65%.
Consolidated FY25 net profit was ₹27.25 crores, with a net profit margin of 14.79%.
Secured over ₹350 crores in long-term contracts, including a ₹197 crore agreement with Schlumberger Asia Services and a ₹102 crore contract from ONGC.
H2 FY25 consolidated income increased 25% to ₹102.34 crores, and EBITDA rose 87% to ₹35.61 crores compared to H1 FY25.

Key financials

2 periods

H2 FY25

Consolidated Total Income
₹102.34 Cr
QoQ +25%
Consolidated EBITDA
₹35.61 Cr
QoQ +87%
Consolidated Net Profit
₹19.16 Cr
Consolidated EPS
₹8.1

FY25

Consolidated Total Income
₹184.31 Cr
Consolidated EBITDA
₹54.64 Cr
Consolidated EBITDA Margin
29.6%
Consolidated Net Profit
₹27.25 Cr
Consolidated EPS
₹11.44

What they filed

₹ Cr · quarterly

Line item	Q2 FY25	Q4 FY25	Q2 FY26	Q4 FY26
Revenue	80	100	136	183
Expenses	63	67	81	89
EBITDA	17	33	55	94
Margin	21%	33%	40%	51%
Other income	2	3	4	0
Interest	3	3	13	18
Depreciation	6	6	13	23
Profit before tax	10	26	33	54
Tax rate	22%	27%	4%	8%
Net profit	8	19	31	49
EPS	3.22	7.83	12.62	19.96

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Segment	Revenue Share (FY23-24)	Expected Revenue Share (FY24-25)
Ship-owning Business	0.4 % of total	0.55 % of total
Ship Management & Port Services	0.6 % of total	0.4 % of total

Capital allocation

high confidence

Capex Capex disclosed 70%-30% or 75%-25% debt-equity model
- Acquisition of two DP2 platform supply vessels (Ocean Diamond and Emerald)
- Acquisition of a third DP2 vessel
So, to come to your first question, all the vessels that we have purchased or we plan to purchase, we always go for a debt-equity model with the banks. And we normally work in 70%-30% or 75%-25% debt-equity model. That has always been the case with us and it continues to be so.
Debt Gross ₹178 Cr Cost 9.5%

And sir, this debt, right, Rs. 178 crore debt, what is the average like finance cost? Like is it 10% or is it higher or lower? ... We work in the range of 9.5% or lesser, sir.
M&A Ocean Diamond and Emerald vessels Acquisition · Closed

Fleet expansion and deployment under active contracts
Contributed to H2 FY25 revenues and expected to secure long-term contracts.

We have also expanded our fleet through the acquisition of the DP2 platform supply vessels, Ocean Diamond and Emerald, both currently deployed under active contracts.
M&A Third DP2 vessel Acquisition · Announced

Further fleet expansion
Scheduled for delivery in Q1 FY26, expected to contribute to future earnings.

The third DP2 vessel is scheduled for delivery in Q1 of FY 26.

Guidance & targets

Profitability

EBITDA Margin Profitability · Going forward · High confidence 40-45%

From 29.65% (FY25) today

Going forward, the EBITDA margins, absolute increase in EBITDA margins should be in the range of about 100%. But the EBITDA margins should be, going forward, should be in the range of 40% to 45% is what we hope to achieve, sir.

— Capt. Jeevan K. Sanjeevan

Revenue Mix

Ship-owning Business Revenue Share Revenue Mix · FY24-25 · High confidence 55-60%

From 40% (FY23-24) today

Now that we have bought in the assets from the IPO proceeds and everything, in 2024-25, we hope that, we are assuming that the earnings from the ship-owning business will go up to 55% to 60%.

— Capt. Jeevan K. Sanjeevan
Ship Management & Port Services Revenue Share Revenue Mix · FY24-25 · High confidence 40%

From 60% (FY23-24) today

And correspondingly, the ship management business will probably come down to, will be in the range of 40%, sir.

— Capt. Jeevan K. Sanjeevan

Revenue

H1 FY26 Revenue Revenue · H1 FY26 · Medium confidence ₹135-140 crores

That is a possibility, sir. Rs. 135 crores to Rs. 140 crores in that range is a possibility, sir, yes.

— Capt. Jeevan K. Sanjeevan

Finance Cost

FY25-26 Finance Cost Finance Cost · FY25-26 · High confidence ₹18-20 crores

So, this year, our finance force could be close to Rs. 18 crore to Rs. 20 crore, right? In this financial area.

— Capt. Jeevan K. Sanjeevan

Fleet Expansion

Third DP2 Vessel Acquisition Fleet Expansion · June 2025 · High confidence Closed this month

Yes, we are working on acquiring one more vessel, which should be tied up with the contract that we hope to close it. All going well, we will be able to close it this month.

— Capt. Jeevan K. Sanjeevan

What to watch in Q1 FY26

Third DP2 vessel acquisition

Next quarter (Q1 FY26)

Current Working on acquiring one more vessel, hope to close it this month.

Target Acquisition closed and delivery in Q1 FY26

Why it matters

This acquisition is a key part of fleet expansion and future revenue generation.

Yes, we are working on acquiring one more vessel, which should be tied up with the contract that we hope to close it. All going well, we will be able to close it this month. And the third DP2 vessel is scheduled for delivery in Q1 of FY 26.

Risks & concerns

Global trade uncertainty (tariff shifts)
medium

Management believes their service-focused, technically compliant model provides insulation from macro-economic headwinds like tariff shifts.

Management downplayed
Client concentration
medium

Historically reliant on government/PSUs, but actively diversifying client base with private players like Schlumberger Asia Services.

Analyst acknowledged
Cyclical nature of shipping business
medium

Management acknowledges the inherent cyclicality but states their strategy of focusing on long-term contracts helps insulate them from these impacts.

Analyst acknowledged

Q&A highlights

7 direct

Client concentration risk Direct

traditionally we were quite focused on the government business and we had a lot of government clients and PSU clients. But of late we have also diversified into private oil field service providers whereby SLB has come in.

Addresses a potential risk by highlighting diversification efforts and the strategic importance of working with national oil companies for stability.

Asked by Priya Jain

Pricing improvements in offshore supply Direct

Yes. We have seen considerable increase in the offshore vessel charter rates. It is primarily happening because of a very tight supply in this section, because of years of depressed markets where there will be no new building activities.

Indicates a favorable market environment for the company's core business, suggesting potential for higher margins and revenue.

Asked by Priya Jain

Funding for new vessel acquisition Direct

all the vessels that we have purchased or we plan to purchase, we always go for a debt-equity model with the banks. And we normally work in 70%-30% or 75%-25% debt-equity model.

Clarifies the company's consistent capital allocation strategy for fleet expansion, indicating a balanced approach to funding growth.

Asked by Ishan

Impact of crude price fluctuations Direct

one of the reasons why we enter into long-term contracts is that fluctuations in the market or the crude oil prices, like you mentioned, does not impact our earnings.

Explains how the company's business model (long-term contracts) mitigates a significant external risk factor, providing revenue stability.

Asked by Ishan

Reason for H1 FY25 weakness vs H2 strength Direct

ABS Anokhi, which had come out of a long-term contract, and we had already secured the new contract. But in the new contract, it is required that all the vessels should be DP2 as per the new contractual requirements of ONGC. ... So, the three months of the first quarter of the previous financial year, we were upgrading that vessel from DP1 to DP2.

Provides a clear, non-seasonal explanation for the quarterly performance disparity, reassuring investors about the underlying business model.

Asked by Ravi

High EBITDA margins on new contracts Direct

So, the vessel EBITDA margins, we expect it to be in the range of 60% to 65%, sir. In that range it should be. ... Because of charter rate revision, sir.

Highlights a significant potential for margin expansion from new contracts, driven by favorable market conditions and vessel type.

Asked by Ravi

Dividend policy Partial

We just got listed, sir, and we are in the process of fulfilling our IPO, whatever we committed in the IPO, that is to acquire new vessels and grow the asset base and grow the value for the shareholders. Going forward, definitely, yes, dividend is something we will be working on and targeting on, sir.

Addresses shareholder expectations regarding returns, indicating a future focus on dividends after current growth initiatives are completed.

Asked by Anil Kumar Sharma

Shipping industry PE ratios and cyclicality Direct

The primary risk in shipping is that shipping is a very cyclical business. There is always cycles of boom and there is always a cycle of lows. So, that could be one of the reasons for GE Shipping's PE. ... But having said that, we focus on term contracts primarily to not have the cyclical impacts coming on to us.

Acknowledges a key industry risk (cyclicality) but reiterates the company's strategy of focusing on long-term contracts to mitigate this, differentiating its business model.

Asked by Manish Bhatiya

2 min read 6 chapters

Detailed narrative

Strong FY25 Performance and H2 Growth Drivers

ABS Marine Services Limited reported a robust FY25, with consolidated total income of ₹184.31 crores and a net profit of ₹27.25 crores. The second half of FY25 saw significant acceleration, with consolidated income growing 25% to ₹102.34 crores and EBITDA rising 87% to ₹35.61 crores compared to H1 FY25. This strong H2 performance was primarily driven by the completion of the ABS Anokhi vessel's upgrade from DP1 to DP2 and the commencement of a new ₹197 crore contract with Schlumberger Asia Services for the Celestial vessel.

Strategic Contract Wins and Fleet Expansion

The company secured over ₹350 crores in long-term contracts during FY25, including a ₹102 crore contract with ONGC and a ₹197 crore agreement for a DP2 well stimulation vessel with Schlumberger Asia Services. Fleet expansion was a key focus, with the acquisition of two DP2 platform supply vessels, Ocean Diamond and Emerald, which are already deployed under active contracts. A third DP2 vessel is scheduled for delivery in Q1 FY26, further enhancing the company's asset base and operational capabilities.

Favorable Market Outlook and Margin Expansion

Management expressed optimism about the long-term outlook for the offshore energy sector, noting a tight supply of offshore support vessels and increasing demand. This favorable market is expected to drive significant margin improvements, with vessel-specific EBITDA margins on new contracts projected to be in the range of 60-65%, a substantial increase from the current consolidated EBITDA margin of 29.65% for FY25. This improvement is attributed to charter rate revisions and the high-value nature of DP2 vessels.

Capital Allocation and Funding Strategy

ABS Marine consistently employs a debt-equity model, typically 70-30% or 75-25%, for funding vessel acquisitions. The company's current debt stands at ₹178 crores, with an expected increase to approximately ₹300 crores following the acquisition of the third DP2 vessel. The average cost of debt is maintained at 9.5% or lower, and finance costs for FY25-26 are projected to be between ₹18-20 crores. Management indicated that dividend distribution would be considered in the future, after fulfilling IPO commitments related to asset acquisition and growth.

Client Diversification and Risk Mitigation

While traditionally focused on government and PSU clients, ABS Marine has actively diversified its client base to include private oil field service providers like Schlumberger Asia Services. This diversification strategy helps mitigate client concentration risk. The company's business model, centered on long-term contracts, also insulates it from the cyclical nature of the shipping industry and fluctuations in crude oil prices, ensuring revenue stability and predictability.

Operational Efficiency and Future Growth Initiatives

The company's strategic priorities include disciplined acquisition of younger, high-spec vessels, prudent capital allocation, and investments in digitalization and advanced fleet management systems. ABS Marine aims to enhance execution excellence, expand its presence in marine and port services, and strengthen shore-based capabilities. The focus for the immediate future is on integrating newly acquired assets and securing long-term contracts for them before pursuing further fundraises or acquisitions.

This is an AI-generated summary of a publicly available earnings call transcript.

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