Summary
Deep Industries Limited - Q3 FY26 Earnings Call Summary Friday, February 06, 2026 11:00 AM
Event Participants
Executives 2 Paras Savla (Chairman and Managing Director), Rohan Shah (Director, Finance and CFO)
Analysts 11 Abhi Shah, Ankur Sawaria, Deepak, Diwakar Rana, Gaurav Sachdeva, Kapil Kumar, Karn Bhargava, Manan Shah, Pankaj Motwani, Parth Agrawal, Rohit Priyadarshi
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations (Q3) | ₹221.5 crores | +43.1% YoY, driven by volume growth across all segments and new contributions from PEC and offshore services. |
| Revenue from Operations (9M) | ₹642 crores | +57.0% YoY, reflecting strong execution across core service offerings. |
| EBITDA (Q3) | ₹110.1 crores | +46.3% YoY, supported by tight control over operating costs. |
| EBITDA Margin (Q3) | 47.6% | +60 bps YoY, management aims to maintain healthy margins in the 46% - 48% range. |
| Net Profit (PAT) (Q3) | ₹71.3 crores | +49.8% YoY, increasing in line with operational growth. |
| Order Book | ₹2,967 crores | Multi-year visibility; management noted a current bidding pipeline of approximately ₹800 crores. |
Geographic & Segment Commentary
- Production Enhancement Contract (PEC): This segment contributed approximately ₹20 crores in Q3. Management expects this to ramp up to ₹150 crores annually by FY27-28, despite a minor 2-3 month delay caused by a recent gas leakage incident at the Rajahmundry field.
- Offshore Services (Dolphin Offshore): Contributed ₹30 crores to revenue and ₹13.5 crores to profit during the quarter. The Prabha DP2 Barge is 100% utilized in African waters and is expected to generate ₹100 crores in revenue for the full financial year.
- Onshore Rigs & Gas Processing: Sustained healthy utilization with two new rigs recently deployed. One rig was deployed in December, and another is scheduled for the first week of March 2026 to drive incremental Q4 revenue.
Company-Specific & Strategic Commentary
- Asset Reliability & Safety: Successfully contained a geological gas leakage incident within 5 days with no casualties. While one rig was partially destroyed, the loss is covered by insurance, and the well is temporarily capped for future recovery.
- Backward Integration: The acquisition of Kandla Energy for ₹2 crores allows the company to manufacture hydrocarbon fluids used in drilling processes. Commercialization is targeted for H2 FY27 following minor capex.
- Capital Allocation: Management has paused the proposed QIP, citing strong internal cash accruals and low debt levels as sufficient to fund routine capex and the PEC project.
- Digitalization & Tech: Management is evaluating emerging opportunities in Carbon Capture Utilization and Storage (CCUS), biogas, and hydrogen to align with evolving global energy trends.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 30% - 35% for FY27 | Based on the existing robust order book of ₹2,967 crores and steady execution in the PEC segment. |
| PEC Revenue | ₹150+ crores per annum | Target for full-scale operations starting FY27-28 as more wells (out of 40) are optimized. |
| Kandla Energy | H2 FY27 Commercialization | Focus on producing internal drilling fluids to support margin expansion through backward integration. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geological & Operational | As seen in the Rajahmundry incident, unexpected geological surprises can damage assets and defer revenue by 2-3 months. Management mitigates this through comprehensive insurance and rapid emergency response systems. |
| Receivable Quality | The company holds approximately ₹208 crores in doubtful receivables from the Kandla acquisition. While no provisioning is expected this year, recovery is uncertain and may lead to future write-offs. |
| PSU Concentration | High exposure to ONGC and GAIL poses concentration risk. Management is attempting to diversify with private clients like Vedanta and Selan, though PSU demand remains dominant in the Indian landscape. |
Q&A Highlights
PEC Incident & Impact
- Question: What is the financial loss and impact of the fire incident at the PEC site? (Gaurav Sachdeva)
- Answer: The well is temporarily capped and will be recovered once a new rig arrives in ~3 months. There are no contractual penalties from ONGC as this is a part of industry risk; however, incremental revenue from this specific well is deferred for a quarter. Significant losses are covered by insurance (Paras Savla).
Order Book & Bidding
- Question: The order book has plateaued at ₹3,000 crores; when will new orders arrive? (Parth Agrawal)
- Answer: The current bidding pipeline is ~₹800 crores. Success rates exceed 50% in some verticals. Expect high conversion in Q4 as several bids are in the L1 stage (Rohan Shah).
Capital Raising (QIP)
- Question: What is the status of the QIP and will pausing it affect growth? (Deepak)
- Answer: The QIP process is currently paused. Future growth and capex for PEC and gas plants will be funded via internal accruals and debt, given the company’s currently low leverage (Rohan Shah).
Dolphin Offshore Operations
- Question: Why was the Prabha Barge shifted from Mexico to Africa? (Pankaj Motwani)
- Answer: Assets are moved based on contract availability and regional demand. It is currently 100% utilized in Africa and is performing as per expectations (Rohan Shah).
Key Takeaway
Deep Industries Limited delivered a strong Q3 FY26 performance, with revenue growing 43% YoY to ₹221.5 crores and EBITDA margins maintaining a healthy 47.6%. The company successfully navigated a major geological incident at its Rajahmundry PEC site, containing a gas leak in record time, though this will defer some revenue ramp-up by 2-3 months. Strategically, the company is focusing on backward integration through the Kandla Energy acquisition and expanding its reach in offshore services, where the Prabha DP2 barge is now fully utilized in Africa. Management has shown confidence in the balance sheet by pausing the QIP, opting to fund future growth through internal accruals. With a robust order book of nearly ₹3,000 crores and a 30-35% revenue growth guidance for FY27, the company remains well-positioned to capitalize on India’s expanding energy infrastructure. Investors should monitor the recovery of the Rajahmundry well and the commercialization of the Kandla unit in H2 FY27.
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