I read the article and didn’t find anything new. This thread has more material than probably what the author knows(obviously he has not put his money and hence the details are not required for him).
Deep Industries is a capital intensive business( a well known fact). For every new order they need to go for a capex. Now some important points to ponder.
- Their EBIDTA margin is 55-58%. They recover the cost of equipment is 3 years while the equipment life is 15-20 years. When the renewal of the contract comes they can bid much lower(as the equipment cost is already recovered) and for competition it becomes tough to win.
- Management says that they will grow 30% even without a new order in FY18.
- Their CBM block will start generating revenue from FY19. This project is fully funded now with $20M QIP with Tridevi Capital.
This all ensures good growth for next 2 years without any capex needs.
If a new order comes then only they have to worry about capex but it also starts giving them additional revenue.
Disc: Invested since lower levels and bullish in the prospects. My views are biased and hence please do your own due diligence.