My notes from Deep Industries concall (Not exhaustive, only covering what I remember and what I thought was important)
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Seeing strong order pipeline in the standalone business, management expects it to convert to orders over the next few Qs (They have been saying this for some Qs, lets hope nos. start getting in the OB soon)
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Expect to grow the standalone business by 20-25% YoY
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Dolphin barge Prabha is undergoing final stages of refurbishment. They have spent 11-11.5mn $ in refurbishing the barge and getting it to working condition. They may have to spend 10-20% more. Prabha is expected to start earning revenues in Q3. Prabha will be deployed in Mexico and management is hoping Prabha can be contracted out for 320 days in a year at a per day rate of ~50000$/year. So annual revenues can be INR 130Cr in FY26. Management expects 50-60% EBITDA margin on Prabha revenues
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Apart from Prabha, Dolphin has bagged an INR 50Cr DSV (Diving support vessel) refurbishment contract where in they will get paid to bring the client’s DSV to operating levels via repairs and refurbishment. The contract is to be executed in FY25. Thanks to this contract and Prabha, management expects 70-80Cr revenues in Dolphin in FY25
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Other assets in Dolphin are anchor tugs which are need of significant repair. Management has no immediate plans to repair them. Instead they are on the lookout for acquiring an OSV/DSV in the second hand market. This is difficult in my opinion as OSV/DSV rates have gone through the roof due to supply shortage and any vessels purchased at current prices may lead to sub-par returns on capital
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Overall I feel in FY26 Deep Industries can deliver 170-180Cr PAT (with 25-35Cr PAT
coming from Dolphin) in FY26 if management executes smoothly in the standalone business and Dolphin. Management quality is not pristine as highlighted in this thread earlier and O&G is inherently a volatile business subject to oil price fluctuations. But given GoI’s thrust on increasing domestic oil production, over the long term, O&G ancillaries like Deep Industries and Seamec could be interesting plays.
Disc: Invested