Deep Industries Poised for Strong Growth and Higher Margins

Ashwin Thakker

— 2 min read

Key Facts on Outlook:

  • Sales Growth: Expects 30%+ year-on-year revenue growth for at least the next 2-3 years, driven by a robust order book.
  • Margin Improvement: Anticipates profit growth exceeding 30-35% due to enhanced margins. Maintains EBITDA margins in the 40-45% range, with new projects like Dolphin and Kandla expected to further boost operating margins (Dolphin 60%+).
  • Key Contracts: Rajahmundry field enhancement project expected to contribute approximately INR 140 crores annually from next financial year. New workover rig contracts for Oil India (INR 45 crores and INR 96.72 crores) set for deployment in Q4 FY26.
  • Strategic Capex: Plans around INR 160 crores for Production Enhancement Contract (PEC) in FY26-FY27 and INR 350-400 crores for new Dolphin vessels (tugs, DSVs, PSVs) in FY26-FY27, tied to firm orders.

Deep Industries Limited reported robust Q1 FY26 financial results, laying a clear foundation for strong future performance. The company's recent earnings call highlighted strategic clarity and operational excellence within India's expanding oil and gas support services sector. As the nation progresses towards energy self-reliance, the demand for specialized support services is increasing, positioning Deep Industries for sustained growth. Management’s forward-looking commentary emphasized significant revenue expansion, improving profitability, and strategic capital allocation.

Driving Future Growth: Strategic Initiatives and Order Book

Deep Industries is poised for a sustained period of expansion, projecting over 30% year-on-year revenue growth for at least the next two to three financial years. This ambitious outlook is underpinned by the company's substantial order book, which currently stands at an impressive INR 3,051 crores, reflecting a 152.15% increase year-on-year. The company's strategic priorities are clearly defined, focusing on maximizing asset utilization, expanding its footprint in Enhanced Oil Recovery (EOR) and unconventional segments through new Production Enhancement Contracts (PECs), and scaling up charter hiring for gas processing plants. Management stated,

"We are expecting growth on a year-on-year basis for more than 30% based on our existing order book itself... for at least next 2 to 3 years, we should continue to grow with the same kind of pace."

This consistent growth trajectory is further supported by the 100% utilization of its workover and normal rigs, signaling strong demand and efficient operations.

Enhanced Profitability from Key Projects

The company anticipates significant improvements in its profitability, with profit growth expected to exceed the 30-35% revenue growth rate due to anticipated margin expansion. Deep Industries has consistently maintained healthy EBITDA margins in the 40-45% range. Key projects are set to bolster these figures; the Rajahmundry field enhancement contract, for instance, is projected to contribute approximately INR 140 crores in annual revenue from the next financial year, with operations already beginning baseline production. The Dolphin subsidiary is also a major contributor, expected to generate around INR 100 crores in annual revenue with high margins of over 60%. The acquisition of Kandla Energy is likewise forecast to improve operating costs by 1.5% to 2% from the next financial year. The company's disciplined capital allocation strategy ensures that planned capex for projects, including around INR 160 crores for PEC and INR 350-400 crores for Dolphin vessels, is undertaken only against firm orders, ensuring efficient resource deployment.

Deep Industries Limited's Q1 FY26 performance and forward-looking guidance indicate a company with strong operational momentum and a clear strategic roadmap. The robust order book, coupled with significant contributions from new projects and a disciplined capital expenditure approach, positions the company for sustained revenue and profit growth. Management's confidence in achieving 30%+ annual growth and improving margins underscores its commitment to delivering long-term value to stakeholders in India's expanding energy sector.

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