SEAMEC Ltd. : Neutral assessment on price but strong on fundamentals

SEAMEC Ltd. relative valuation is now NEUTRAL. It was previously rated OVERVALUED, and has a fundamental analysis score of 82.

Our analysis is based on comparing SEAMEC Ltd. with the following peers – ABG Shipyard Ltd, Bharati Defence and Infrastructure Limited, Modec, Inc. and Western India Shipyard Limited (532682-IN, 532609-IN, 6269-JP and 531217-IN).

Relative Valuation

SEAMEC Ltd. is currently neutrally valued, as its previous close of INR 94.40 lies within the CapitalCube estimate range of INR 76.23 to INR 94.51. Over the last 52 week period, SEAMEC Ltd. has fluctuated between INR 64.25 and INR 127.

Relative Valuation

Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • SEAMEC Limited trades at a lower Price/Book multiple (0.65) than its peer median (0.83).
  • The market expects faster earnings growth from 526807-IN than from its peers and also a turnaround in its current ROE.
  • 526807-IN has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • 526807-IN‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • Compared with the peers chosen, 526807-IN has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.

Investment Outlook

SEAMEC Ltd. has a fundamental score of 82 and has a relative valuation of NEUTRAL.

SEAMEC Ltd. appears on the top right hand quadrant of CapitalCube’s Value – Price Matrix. We classify this as ‘Safety’. In other words, SEAMEC Ltd. has a relatively high Fundamental Analysis score of 82, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 85.37. There might be some safety in this stock where it’s fundamental strength perhaps justifies its relatively higher price.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

526807-IN has a Turnaround profile relative to its peers.

The market expects 526807-IN to grow faster than the median of its chosen peers (P/E of 48.22 compared to peer median of 28.90) and to improve its current ROE of 0.65% which is below its peer median of 5.30%. Thus, the market seems to expect a turnaround in 526807-IN‘s current performance.

The company trades at a lower Price/Book multiple of 0.65 compared to its peer median of 0.83.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

526807-IN has moved to a Turnaround from an Harvesting profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

SEAMEC Ltd. provides marine, construction and diving services to offshore oilfields in India and abroad. It owns and operates four multi support vessels SEAMEC-I, SEAMEC-II, SEAMEC-III and SEAMEC PRINCESS for providing support services, including marine, construction and diving services to offshore oilfields. The company was founded on December 29, 1986 and is headquartered in Mumbai, India.

Disclaimer

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