Deep Industries Ltd Q1 FY27 Earnings Analysis

- Deep Industries expects a revenue growth of 25% to 30% year-on-year for FY27, aiming for around INR 1,100 crores. - Growth is driven by new orders expected in the first half of FY27, including major contracts awaiting award. - The company anticipates maintaining an EBITDA margin of approximately 44%-45%. - Over the next 3 to 5 years, the management is optimistic about significant growth, possibly doubling revenues due to increased drilling activities both onshore and offshore. - Multiple business verticals—including production enhancement contracts (PEC), drilling, and gas processing—are all expected to grow symmetrically. - Capex of around INR 150 crores is planned for rigs and gas processing units to support this growth. - Market opportunities are expanding with government support and increasing demand for oil, gas, and related services. - Offshore segment expansion is targeted with a cautious and selective approach.

- Deep Industries expects a revenue growth of around 25% to 30% year-on-year for FY27 and beyond. - EBITDA margins are projected to be maintained around 44%-45% with slight variations of 1%-2%. - The company is optimistic about continuing the growth trajectory for at least 3 to 5 years, potentially doubling in size. - Earnings growth is expected alongside revenue owing to increased capacity in drilling rigs, gas processing units, and production enhancement contracts (PEC). - PAT for FY27 is anticipated to be around INR 400 crores plus, with a strong growth outlook into FY28. - New rig deployments and expanded order book inflows support revenue and profit expansion. - Offshore and onshore oil exploration is seeing equal push, broadening business opportunities. - Return on Investment (ROI) for new capex is targeted to be above 20%.

- Capex of around INR150 crores planned primarily for rigs and gas processing units, targeting orders already bid for. - Additional capex of around INR300 crores expected this year under PEC, rig segment, and gas processing. - Potential increased capex if new offshore orders are secured. - Plan to acquire higher capacity drilling rigs (around 2,000 horsepower) with estimated capex of INR100-120 crores, to be funded through internal accruals and debt, likely via JV. - Expansion of Dolphin Offshore fleet with possible addition of more assets. - Exploration into green hydrogen vertical, recently entered via MOU; investment plans to be clarified in 2-3 quarters. - No plans for large acquisitions like Dolphin, focusing mainly on organic capex and selective offshore expansion.

- The company has decided **not to proceed with the earlier planned QIP (Qualified Institutional Placement)** given the drastic improvement in cash flows. - For new capex, including a new 2,000 HP drilling rig estimated at around INR 100-120 crores, the funding plan includes **internal accruals and debt**. - No mention of any immediate large equity fundraising or acquisitions akin to Dolphin Offshore at present. - The company is focusing on capex around INR 150 crores primarily on rigs and gas processing units, expected to be funded internally with some debt if needed.

- Current order book stands around INR 3,000 crores, stable for the past 4-5 quarters. - Out of this, more than INR 800 crores is expected to be executed in FY27. - The order book includes a 15-year contract and other contracts with an average life of 2.5 years. - The company is optimistic of adding new orders, especially from major contracts likely to be awarded soon. - Bidding pipeline currently stands close to INR 500-600 crores, excluding recent PEC tenders. - New orders from PEC and higher capacity drilling rigs are expected to enhance order inflow. - Management aims to improve order book details with detailed footnotes for investors in future disclosures. - The company is seeing increased bidding activity and expects order book to grow reflecting sector demand.