Any current/future capex/capital investment/strategic investment?

The company is in the final stage of acquiring Rig Jindal Pioneer, currently deployed at a bareboat charter rate of US$ 35,000 per day; this purchase has been approved by the board, audit committee, shareholders, and is awaiting final statutory approval. This acquisition is strategic to increase operations in India, as demand for rigs from ONGC is expected to rise. Jindal Pioneer will be refurbished and redeployed in India post its current contract in Mexico, with refurbishment expected to take about 6 months after contract completion. Payment for Jindal Pioneer will be on a staggered ba

Future growth expectations in sales/revenue/volumes?

The company expects EBITDA to improve on a year-on-year and quarter-on-quarter basis, with a dip in Q1 and Q2 FY25 due to rig refurbishment but a sharp improvement from Q3 FY25 onwards. Acquisition of Rig Jindal Pioneer, currently on a US$ 35,000/day charter, is expected to immediately boost earnings once regulatory approvals are received. ONGC's demand for rigs is stable with expectations of increased production, which should drive rig demand and revenue growth over the next few years. Fleet expansion plans include increasing the number of rigs operated, supported by the purchase of Jin

Future growth expectations in earnings/operating earnings/profits/EPS?

FY24 saw improved revenue and profitability due to deployment of all 5 rigs. Earnings in FY25 expected to improve with redeployment of owned rig Jindal Supreme by Oct-Nov 2024 at higher rates. EBITDA expected to decline in Q1 and Q2 FY25 due to one rig de-hire, but rise sharply from Q3 FY25 onwards. Acquisition of rig Jindal Pioneer (pending statutory approval) will immediately enhance earnings upon completion. Promoter stake increased in Q4 FY24, positively impacting shareholder value. Market outlook remains very good with increasing rig demand expected from ONGC and rising rig rent

Current/ Expected Orderbook/ Pending Orders?

The order book as of 31st March 2024 stands at approximately US$ 251 million. Majority of the earnings and EBITDA are generated from the rig segment. The company is currently operating 5 rigs, with plans to increase the fleet. Jindal Pioneer is in the process of being purchased; once acquired, it will contribute to the order book and earnings. ONGC currently operates around 34 rigs; demand for rigs is expected to increase with rising exploration targets. ONGC's rig requirement remains steady with occasional tender cancellations and re-tendering expected. No free rigs are presently available fr

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Jindal Drilling & Industries LtdQ1 FY24Oil

Jindal Drilling & Industries Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹566P/E: 7.1Market Cap: ₹1.7K CrSector: Oil

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→The company expects EBITDA to improve on a year-on-year and quarter-on-quarter basis, with a dip in Q1 and Q2 FY25 due to rig refurbishment but a sharp improvement from Q3 FY25 onwards.
→Acquisition of Rig Jindal Pioneer, currently on a US$ 35,000/day charter, is expected to immediately boost earnings once regulatory approvals are received.
→ONGC's demand for rigs is stable with expectations of increased production, which should drive rig demand and revenue growth over the next few years.
→Fleet expansion plans include increasing the number of rigs operated, supported by the purchase of Jindal Pioneer, anticipating higher day rates in the coming years.
→Market outlook for rig day rates is positive, with existing older contracts at lower rates transitioning to higher rate contracts, supporting revenue growth.
→Refurbishments and redeployments of rigs such as Jindal Supreme will extend asset life and contribute to improving revenue from FY25 onwards.

Margin guidance

Category 3

→FY24 saw improved revenue and profitability due to deployment of all 5 rigs.
→Earnings in FY25 expected to improve with redeployment of owned rig Jindal Supreme by Oct-Nov 2024 at higher rates.
→EBITDA expected to decline in Q1 and Q2 FY25 due to one rig de-hire, but rise sharply from Q3 FY25 onwards.
→Acquisition of rig Jindal Pioneer (pending statutory approval) will immediately enhance earnings upon completion.
→Promoter stake increased in Q4 FY24, positively impacting shareholder value.
→Market outlook remains very good with increasing rig demand expected from ONGC and rising rig rental rates.
→Long-term plans include expanding rig fleet to capitalize on buoyant market conditions.
→Earnings fluctuations primarily due to transitioning rigs from low-rate old contracts to higher-rate new contracts.
→PAT and EPS improved by around 80% in Q4 FY24 versus Q4 FY23.

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Fundraise plans

- No plans to raise new debt for general purposes; existing debt is primarily for rig refurbishment. - Debt on rig Discovery-1 (around Rs. 80 crores) will be fully repaid by 31st May 2024 from internal accruals. - Company expects improved cash flows and does not foresee need for additional debt. - Financing for the purchase of rig Jindal Pioneer (net cash outflow approx. US$ 45 million) will be staggered and internal accruals will be utilized; no specific mention of new debt. - No mention of raising equity capital in the current or near future plans. In summary, Jindal Drilling & Industries Limited is not currently planning fundraising through new debt or equity, relying instead on internal accruals and existing cash flows for capital needs.

Order book

→The order book as of 31st March 2024 stands at approximately US$ 251 million.
→Majority of the earnings and EBITDA are generated from the rig segment.
→The company is currently operating 5 rigs, with plans to increase the fleet.
→Jindal Pioneer is in the process of being purchased; once acquired, it will contribute to the order book and earnings.
→ONGC currently operates around 34 rigs; demand for rigs is expected to increase with rising exploration targets.
→ONGC's rig requirement remains steady with occasional tender cancellations and re-tendering expected.
→No free rigs are presently available from Jindal Drilling, indicating full deployment.
→Future contracts are anticipated at higher day rates, reflecting market buoyancy and increased demand.

Capex plans

Yes

→The company is in the final stage of acquiring Rig Jindal Pioneer, currently deployed at a bareboat charter rate of US$ 35,000 per day; this purchase has been approved by the board, audit committee, shareholders, and is awaiting final statutory approval.
→This acquisition is strategic to increase operations in India, as demand for rigs from ONGC is expected to rise.
→Jindal Pioneer will be refurbished and redeployed in India post its current contract in Mexico, with refurbishment expected to take about 6 months after contract completion.
→Payment for Jindal Pioneer will be on a staggered basis, and the company does not plan to take on fresh debt for this acquisition.
→The company plans to increase its fleet of rigs to capitalize on the positive market outlook.
→No new construction orders for rigs are currently planned due to long delivery timelines (2.5 to 3 years) and high prices (~US$ 270-300 million).

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