Does any one have any updates on demerged entity listing… It has been lot of wait already on this…
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I have confirmation from the company that it has made an application for listing of shares to both NSE and BSE and has received in-principle approval from both Stock Exchanges in third week of March. SEBI approval is still awaited.
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@paresh.sarjani1 @reachvk @ferozk
I have an account with ICICI DIrect and on not receiving the new shares of the resulting company (my old DIL shares have been converted to Deep Energy Resources Limited), I mailed the company CS. She promptly responded that ‘we have already alloted the shares of resulting company on November 12, 2020 and if the shares not yet received by you, we hereby humble request you to contact your Concerned Depository Participant (DP) in this regard. The Company is in the process of listing of Deep Industries Limited, Resulting company’s shares.’
Are you able to see the resulting company shares (unlisted) in your Demat account already or will they be visible only after the shares are listed?
@njain1983 I have the same problem. I thought the shares were going to be alloted in the future.
Anyway I checked on bseindia or nseindia if deep industries was already listed or not.
Deep energy resources is but deep industries is not. When I search. I can’t find it !!!
The easiest way to check the truth of the company statement is to ask them to provide the link to their stock price on a stock exchange before we chase the depository
Maybe I wasn’t clear in my earlier post so stating again,
- company CS has not claimed that DIL shares have been listed, she said they are in the process of getting DIL shares listed.
- They have already alloted the shares (unlisted DIL shares) to the eligible shareholders.
So my query to this forum was - is anyone able to see the DIL (unlisted shares which the company claims to have allocated already) in their Demat/Trading account or will they only be visible to us after the DIL shares have been listed.
@njain1983 I looked through my demat account and couldn’t find it. Maybe we need to chase the depository or the icicidirect.
My account is in Sharekhan and there are 2 icons for your holdings, one is DP/SR REPORT (has all listed & traded scrips) & the other is plain DP (has all listed & unlisted scrips) check in your DP, you should find it there. Hope this was helpful. I can send you screen shots if needed. Incidently, I had sold my Deep Energy shares on 19th feb.
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If you are also using ICICI Direct then check under ‘Demat Allocation’ tab, you will see it. I just checked after reading @skrksb61 post.
I can see both Deep Energy Resources and Deep Industries Limited shares listed there. There is a column that says ‘Allocated quantity’. It is Zero for DIL as its not listed yet. Once the shares get listed, I think it will be visible in our portfolios automatically.
I received an email from CDSL on 25-12-2020 intimating of credit of Deep Industries shares to my Demat account. The ratio of allocation of shares of Deep Industries is 1:1. I have yet to check my Demat a/c to confirm if the shares are actually credited. With confirmation from the depositary, I have no reason to believe the shares would not be credited.
Deep Industries is getting listed tomorrow as per NSE Forthcoming listings
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What is the impact of rising crude prices on Deep Energy Resources Ltd?
The company is into gas and oil exploration according to their annual report.
Deep Industries have been demerged into Deep Industries & deep energy resources ltd. So this post is about demerged Deep Industries.
Given the current Govt. push for moving the economy towards gas powered economy and taking the contribution of gas from 6 to 15% in the energy basket, Deep industries seems like a player who can benefit from this tailwind. Plus at about 7-8 times current year earnings does it look worth a risk for the mgmt issues that have been discussed in this thread earlier ?
Also it has added one more growth driver in form of it’s subsidiary RAAS equipment Pvt. Ltd. which is into CNG booster compressors. The current capacity of RAAS gives it a revenue potential of 120-150 cr. That compares nicely in terms of opportunity compared to it’s TTM revenue rate of 300 cr. in core services.
Gas related services seems capable of growing ~15% given the current tailwind and order book growth in Q2-Q3. So if we add the potential opportunity in compressors , this seems like an opportunity which isn’t reflected in the price yet ?
Notes from Q1’22 Call
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4 lines of business - Natural Gas Compression, Gas dehydration, Drilling & workover rig services, integrated project services (relatively new business) & new business unit of CNG booster compressors through subsidiary RAAS equipment pvt ltd. 22-37kW, highly efficient compressors.
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CNG booster compressors are critical to expansion of CGD. Mkt Estimate, more than 20k booster CNG compression stations and 6.6k online CNG compression station are to come up in next 6-8 yrs. Of these 6600 CNG compressors station, at least 80% of these will be daughter booster stations, requiring booster compressors packages, generating huge demand for booster compressors. RAAS has installed capacity of 250 units per annum and aiming to increase the capacity in next 3 years.
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Standalone Revenue 67.86 cr. up by 31.1% over Q421. EBITDA 30cr up 20.43% over Q421 (margin 44.21%), PAT 16.87 cr. vs loss in Q421. (margin 24.48%)
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Consolidated : Revenue 71.01 cr. up by 17.28% over Q421. EBITDA 30.2 cr up 18.013% over Q421 (margin 42.53%), PAT 18.72 cr. vs loss in Q421. (margin 23.26%). Cash profit 29.68 cr. (41.22%)
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Competitive Landscape : Natural Gas compression :- Been able to retain market share of 70-80% over last 20 years. Workover rig services :- 5-6 active players, market share 20-25%, Gas Dehydration :- Market share of ~30%, we see sizable growth in this segment. Integrated project mgmt. - only 2-3 Indian players and mostly MNC competitors, we are gaining share.
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Outlook : We are part of OIl & gas segment, but we are mainly focussed on gas production services. Mainly into compression and then ventured into dehydration. Lot of LNG was getting imported to country, and as a policy, country is looking to ramp up local production. So CNG is going to have huge demand both production & compressors.
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RAAS (Compressors) - installed capacity 250 units, started last quarter. infrastructure is there to ramp it upto capacity of 500 units. Cost would be about 40-50 L per compressors. So revenue potential is about 120-150 cr. per annum. 5-7 players in the country.
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Debt : Term 33 cr., Net Debt : 0 . Last 2-3 years of difficult time have been able to survive due to no debt and inclined to keep it that way. Demand for gas was impacted.
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Customer Profile : handful of customers in OIl & Gas Industry. RAAS has added CGD customer like Adani, AOCTL (?)
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Depreciation : We used to ammortize the goodwill. From this quarter we have stopped, to follow INDaS.
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Business Model : Operate on long term contracts basis. More or less, quarterly run rates would be maintain unless new orders are added. Margin will be maintained and they have been same in 40-50% range for many years.
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Capex - Eyeing utilization of existing capacity. No capex plans as of now, but as we get new order, we may go for CapEx.
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ONGC Contract termination : Was 2 years back, reason was veracity of certain documents challenging a certain qualification criteria and it’s interpretation nothing to do with performance. Some funds were blocked and later released. So it’s past.
Disc: Have a small position created around current price.
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Q2 Call Notes
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Recent new order value is 65.9 cr Total order book 435 cr. Pipeline 200-300 odd cr. , depends on the outcome tender submitted and yet to submit.
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Standalone: Revenue 66.26 cr. up by 50% over Q221. EBITDA 25.41 up 10.43% over Q221 (margin 44.21%), PAT 18.86 cr. (margin 28%). Cash profit 24.10 cr.
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Consolidated : Revenue 91.27 cr. up by 958% over Q221. EBITDA 28.35 cr up 17% over Q221 (margin 42.53%), PAT 21.32 cr. (margin 23.3%). Cash profit 26.79 cr.
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Outlook : There is an increased push for Natural Gas as fuel and this will directly expand our gas processing services (compression & dehydration). Secondly, 23k booster & 6.6k online compressor will come up in next 6-8 years will increased demand for compressors (RAAS)
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Customer : Main revenue vertical is gas compression, which has application in gas transportation, artificial gas lift, gas fired power plant. Each of these application is cost saving for the client. Gas processing still done majorly by the producers. But there is opportunity in chemical, refineries, fertilizers. So converting them in an outsourced model is an opportunity. We provide almost the
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Margin : Maintaining above 40-45%, seen some decrease in last few Q because under integrated project mgmt few things are outsourced and has less margins. Which we believe should improve in coming quarters, as on completion of first contract of IPM we will be ourselves be technically qualify for all services and that will improve margins. We believe we have one of the best margin in industry. Except margins to be in range of 45%.
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Off shore drilling services : We are not in offshore business. We do onshore.
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CapEx : Submitted lot of tenders, and few are in pipeline. possibility of CapEx depending on order win. Have decent cash flows & cash on books, we will use them.
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Clients : ONGC one of the largest, but we also work with Vedanta, OIl, GSPC etc… Now we having subsidiary in Dubai having contracts in Egypt. Plan to diversify both in India and abroad and limit the %age contribution from any particular client. We have one ongoing contract in Egypt and expecting one more. Dubai subsidiary contributed 15% of total revenue in H1 on consolidated basis & expecting it to grow.
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Q3’22 Call Notes
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Govt aims to increase the usage of Natural Gas in energy basket from 6% to 15% in .
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Order book : 556 cr. to be executed in next 18-24 months. Majority of clients are PSU (roughly 70%+). Includes RAAS order book of 45 cr. (about 100 compressors ?)
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Focus on BS strength, and 0 net debt company. Business generates healthy free cash flow 73 cr. & 58 cr in FY21 & H122 respectively.
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Currently operating in 20 locations in India. RAAS started manufacturing CNG booster compressors in Q421 and will be a growth engine.
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Deep has a wide range of fleet of compressors & dehydration units with current utilization at 100%.
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Standalone: Revenue 61 cr. up by 44% over Q321. EBITDA 27.65 up 75% over Q221 (margin 41.65%), PAT 15.9 cr. (margin 23.95%). Cash profit 24.10 cr. 9 month revenue 195 cr. , EBITDA 84 cr.,
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Consolidated : Revenue 91.27 cr. up by 74% over Q321. EBITDA 28.35 cr up 17% over Q221 (margin 42.53%), PAT 17.7 cr. (margin 22.69%). Cash profit 26.79 cr.
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Q3 topline was impacted (QoQ basis) mainly due inter locational movement of resources due to covid. Situation has been normalized in Jan 22.
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9 cr. Debt, 0 debt on net debt basis. For H1 OCF/EBITDA 112%
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Last year was not good at EBITDA level. But last 10 yr track record is above 40%. We will maintain that. Almost equal contribution from all 4 lines of business. Gas dehydration has slightly lower contribution, we are working to take it to similar contribution.
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Growth Outlook : Fortune tied to the Gas sector & we are seeing large interest in this. Historically we have seen growth of 15-20% .
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Business Model : We buy the equipment, configure to the requirement of client and commission at client installation and operate & maintain at client site. We own the equipment. Utilization at 80%. We are trying to evolve into Integrated Project Mgmt services where we also outsource the equipment requirement and reduce investment into assets.
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Cash utilization Plans : Plan to going into new growth areas like gas processing field, like setup early production facility, removal of CO out of gas. we are trying to combine these value added service along with our traditional services of compression & dehydration. Cash will go into purchasing equipment and technologies.
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Large intangible on BS : It’s a goodwill generated out of the demerger. It will stay in BS.
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CNG Booster Compressors : Started in Q421. are used at CNG station, CGD network and daughter/mother stations(??). We are envisaging huge demand due to allotment of new CGD licenses countryside. Perhaps 6.5k units demand on annual basis. Expect good demand as very few players in country. Cost would be in range 40-55L depending on the configuration. Our capacity is 250 units, will plan growth depending on market demand. We plan to utilize the full capacity by next year (So this should add about 120-150 cr. revenue for next year).
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Business Outlook : Gas compression : Have majority of market share. But only 30-35% has been outsourced and increasing YoY. When we started in 96, it was first time client had outsourced and has now increased to 30-35% in last 25 years. In developed countries the proportion is inverse. So we expect the market to grow further.
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Equipment utilization is at ~80%. First plan is to utilize it at 100% we may go for CaPeX. Do capex only on confirmed order. Only if client demands new equipment we will go for new equipment.
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Client Perspective on outsourcing : Asset light. Operation efficiency of more than 99% , not possible to get this through internal employee. They can penalize DIL for not meeting the standards.
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We have bid for lot many projects as well as booster compressors.
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ONGC Contract termination : Was 2 years back, reason was veracity of certain documents challenging a certain qualification criteria and it’s interpretation nothing to do with performance. Matter of that particular contract is sub judice. But this doesn’t impact other tenders/contracts. It’s business as usual.
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New contract takes about 6-9 months install/commission & start operations.
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Q4 would be more or less as per expectations. Sizable growth expected from coming year onwards.
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Asset life is generally 15-20 years and contracts are typically for 3 yr period and then up for rebidding.
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Looks to be a great company as debt free and good tailwinds of orders in all segments and ebidta is always good
In my opinion, as 70% of their revenue comes from Oil India and ONGC, we should closely track their CAPEX plans as that would reflect the rise or fall in Deep Industries’ order book.
As per their explanation, It’s the other way around.
Exactly, what I meant: their order books go up if the CAPEX plans of ONGC & Oil India goes up.
How is it contradictory?
Right. My bad. I didn’t realise you meant capex plans for ONGC & Oil.
But given the scale of ONGC & Oil don’t you think it will be difficult to correlate their capex with orders for Deep ?
They might have many projects which may not be linked to Deep. Plus we need to be sure about what kind of capex are undertaken by the ONGC/Oil before the order start showing up for Deep. I haven’t looked at ONGC/Oil from this angle. If you come across anything interesting, do share.
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Deep wins another order of 40 cr from ONGC.
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