ABS Marine

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.

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.

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.

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.

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.

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.