Deep Industries Projects Strong Growth and Margin Uplift

Ashwin Thakker

— 2 min read

Deep Industries Limited’s Q1 FY26 earnings call provided a comprehensive outlook on the company’s forward trajectory, emphasizing sustained growth and enhanced profitability. Management highlighted key strategic initiatives and robust financial projections for the upcoming periods.

Key Facts on Outlook:

  • Sales Outlook: Over 30% year-on-year growth projected for the next 2-3 years.
  • Margin Outlook: EBITDA margins expected to improve, with Dolphin contributing over 60% and Kandla improving operating costs by 1.5-2% from next fiscal year.
  • Order Book: Stands at INR 3,051 crores, marking a 152.15% year-on-year increase.
  • Key Projects Revenue Contribution: Rajahmundry Production Enhancement Contract (PEC) expected to add INR 140 crores annually; Dolphin generating approximately INR 100 crores annually; HF Hunter Joint Venture tug anticipates $17,000-$20,000 daily revenue with 50% margins.
  • Capex Plans: Dolphin fleet expansion targeted at INR 350-400 crores, starting Q2/Q3 FY26; PEC contract capex of INR 160 crores, with INR 70-80 crores in FY26.
  • Bidding Pipeline: Current pipeline valued at around INR 700 crores, with good conversion prospects.

Deep Industries Limited showcased a strong Q1 FY26 performance, setting a promising trajectory for the future. The company's recent earnings call highlighted a robust strategic outlook, driven by significant contract wins and a favorable market for oil and gas support services. Management conveyed confidence in sustaining impressive growth and enhancing profitability, underpinned by strategic investments and operational efficiencies. This positions Deep Industries for long-term value creation.

Sustaining a Robust Growth Trajectory

Deep Industries Limited is charting a clear path for sustained expansion, projecting over 30% year-on-year revenue growth for the next two to three years. This ambitious outlook is firmly supported by its substantial existing order book, which currently stands at an impressive INR 3,051 crores, reflecting a 152.15% increase year-on-year. The company's strategic focus on timely contract execution is proving instrumental.

As Chairman and MD, Mr. Paras Savla noted, “We fully expect this [Rajahmundry field enhancement] to significantly boost our output in the coming quarters.”

Additionally, new contract awards, including significant workover rig agreements with Oil India Limited totaling over INR 140 crores, and the recent revenue generation from the Prabha barge, are key contributors to this positive momentum. The company plans to add two new rigs to its fleet to meet increasing demand, further strengthening its operational capacity.

Enhancing Profitability and Strategic Capital Allocation

Beyond top-line growth, Deep Industries is strategically focused on improving its profitability. The company anticipates an uplift in its EBITDA margins, especially as the contribution from Dolphin, which boasts margins over 60%, increases within the overall revenue pool. Furthermore, the Kandla Energy acquisition is expected to improve operating costs by 1.5-2% from the next fiscal year, adding to efficiency gains.

The management affirmed a “prudent performance-driven approach” to growth, supported by strategic capital expenditure. Plans include investing INR 350-400 crores in Dolphin's fleet for new tugs and vessels, contingent on firm orders, and approximately INR 160 crores for the PEC contract, with about INR 70-80 crores slated for FY26. This disciplined investment, coupled with a robust bidding pipeline of around INR 700 crores, underscores the company's commitment to delivering long-term value to stakeholders.

Deep Industries Limited's Q1 FY26 earnings call painted a picture of confident forward momentum. The company’s clear guidance on sustained revenue growth, improving margins, and strategic capital deployment reinforces its strong market position. With a significant order book and disciplined execution, Deep Industries is well-equipped to capitalize on the robust demand in the oil and gas support services sector, driving consistent financial performance and stakeholder value in the coming years.

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