@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.
3 Likes
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.
3 Likes
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.
8 Likes
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.
1 Like
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.
2 Likes
Deep wins another order of 40 cr from ONGC.
3 Likes
Positive for their “Dolphin” acquisition.
Q3FY23:
• STRONG DEMAND: This is reflected in our strong order book, which currently stands at Rs 976cr up 76% YoY. With a thriving bidding pipeline, future demand looks promising and our debt-free, well-funded status positions us for success.” Company is witnessing high EOIs & bids submission which could further enhance the order book going forward.
• The Government also announced the availability of 26 exploration and development blocks totalling around 2.23 lakh sq km under the HELP Policy. Furthermore, 75 discovered oil and gas fields across multiple onshore and offshore basins were offered under DSF-3 bidding. These policies have interested many new players forming a base for the potential expansion of our clientele. gas production in India is slated to increase 18% CAGR till FY ’25.
• DOLPHIN OFFSHORE: With the acquisition of Dolphin, the group is set to expand its services portfolio to the offshore segment. Now we are in a position to give service to our clients both onshore and offshore from exploration to production and processing. With multiple growth factors in action, we anticipate substantial growth ahead. Our revenue outlook is positive, and we anticipate robust interest in our offerings. We have also started evaluating the present tenders, which are already there in market for offshore services, few of them which Dolphin can provide. Operations will take another six months, nine months to actually start up and running. In the past, Dolphin was operating on more than 35% EBITDA, and we are also sure that we can achieve those type of margins. Dolphin offshore entity will be listed.
• Our margin outlook is in range of 40%.
• See, in opex, fuel is one of them and manpower is one, and repair maintenance of store spare is one of them. So, these three heads are major costs for us, other than that, all other normal operating expenses are there.
• CNG BOOSTER COMPRESSIONS: with regards to CNG Booster Compressors, the business is picking up, but at a slow pace. So, it is picking up with little slow speed than our expectation. So, in quarter 3, number of units sold by us are seven units of Booster Compressors. So, the capacity which we have installed as of now is 250 units a year. And our expectation was to reach 100 units by FY ’24, but the demand which we were anticipating is little delayed because the companies who have been awarded GA are getting extension from government. And so there, implementation of this is getting delayed, resulting into the delayed demand on our equipment’s. At peak capacity at around this 250 units, Around INR 100 crores revenue can be done with around 18% EBITDA.
2 Likes
A summary of the Deep Industries opportunity
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Order book of 1082 cr. executable in about ~2.5 years. Annual run rate of roughly 400 cr. At roughly, 25% PAT margins, would mean about 100 cr. of PAT per year. Further there is good bullishness on the sector for energy self sufficiency.
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Dolphin acquisition (Acquired for 27 cr. under IBC.) to start contributing from mid of FY24 (6-9 months as per Q3 call). At it’s peak Dolphin had about 400 cr. revenue rate with 30% EBITDA margins. Hopefully by FY25 they would be able to reach 1/4th of the peak revenue rate!!? Mgmt. is hopeful to cross Dolphin’s past numbers, but for obvious reasons not ready to comment on a timeline at this point.
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RAAS compressors contribution is negligible, so ignoring it for now.
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Has won an arbitration award of 108 cr. from ONGC and expect 75% of that from ONGC anytime now. ONGC has gone to challenge this award in higher forum.
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Net cash of about 60 cr. in hand.
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Market cap = 852 cr. , EV~800 cr. Trailing 12 month PAT of 78 cr. could get to about 85 cr. PAT in FY23.
Appears like a decent bargain given the growth prospects ?
Disc: Invested from lower levels.
9 Likes
Q4FY23 Notes:
• Order book has increased to Rs. 1,078 Cr.; up by 71% on YoY basis. With regards to breakup of our order book, out of INR1,078 crores of order, almost gas compression consists of 52% of order book. Rig consists of around 36% of order book. Gas dehydration consists around 5% of order book, and rest is from integrated project management.
• Company is witnessing highest ever bidding pipeline which could further enhance the order book going forward. Our bidding pipeline is as good as around INR800 crores, and of which we are expecting some good amount of conversion in current year as well
• Refurbishment of major assets has been started and it is expected that Dolphin will start earning operational revenues in H2FY24
• Growth Guidance: With regards to growth coming up in the next financial year, since we have a good amount of order book in place and almost sure kind of revenue for the next 2 to 2.5 years, we expect to grow around 20% on a conservative basis on CAGR. That is what we expect for years to come.
• IPM: So in integrated project management, we have successfully completed our first project and we are doing some small integrated projects with Oil India and Selan as well. With ONGC, we have bidded for another integrated project. We are expecting to have some good outcome in that as well.
• I think since we are into pure services business, our business has not much impact of crude or gas prices because at the end of the day our services are indispensable kind of services. Whatever the price would be, our services would be required by every producer and transporters.
• There are three gas compression contracts which are getting added by this current quarter and will start coming into revenue.
• Dolphin Offshore assets: we have already started getting expressions from various clients and the response is excellent because the asset which we are having, I think it is one of the rare assets and there are only six to seven such assets in entire world. So, we are quite bullish on getting business on that asset.
Business would be almost same as our business margin. There can be some higher margins as well. But conservatively, we are expecting 40%, 45% EBITDA
Even before the acquisition, we met our clients and there is a lot of vacuum in this industry.
Dolphin used to do around INR300 crores, INR400 crores, INR500 crores top line. Is that market of that size still there available for us? Paras Savla: Honestly speaking, I believe it is much, much, much more than what even they were doing, because they were doing this before four, five years now. And in these four, five years, the level of requirement, the level of services, see lot of equipment, what they used to, a lot of services, what they used to provide in the market, I think the demand has superseded to what the supply is. So I’m just being optimistic. I do not have a clarity on what the answer would be in terms of numbers. But the only thing that I clearly understand is that these numbers are very, very easily achievable in a span of time.
• RAAS has achieved INR17 crores over a year for FY '23. We are already providing booster compressors to Adani, IOCL, Gujarat Gas, AGNP and all. We are reporting EBITDA of around 19%
• See, we are very much focused and as I mentioned to see, the only thing that we believe is that we have to have a lot amount of financial discipline and that is the key to this business. So, if we do not get our dues intime, this could be dangerous. And we know this, having seen having acquired these companies where they had gone wrong, so we’ll never make such mistakes. We are very, very, vigilant on getting our dues.
• Raja Panda: Recently the Dhamra project was announced where LNG import of a roughly large amount from Adani Gas is going to happen. So, my question was, does the gas compression services that our company provides are required for such kind of import? Paras Savla: Yes,yes it is very much needed. So, we have been in past already providing services to Petronet LNG, KLPL, and we are already doing it for GFPC LNG right now. So, this requirement of compressor are definitely going to be for any new LNG terminal that is going to come up.
5 Likes
Q1FY24:
• Order Book at 1160cr. Ebitda margin 45%. Robust Bidding Pipeline - Company is witnessing highest ever bidding pipeline which could further enhance the order book going forward
• JV with Focus Energy Ltd:
Breitling Drilling Pvt Ltd (BDPL) – JV through subsidiary – will aim to tap opportunities in higher capacity onshore drilling rigs services in India.
Helps in getting qualifications for bidding certain projects which otherwise would 2 have taken 2-3 years.
Synergy benefits to capture additional market share in higher capacity drilling rigs
• JV with Euro Gas S.R.L:
Deep Onshore Drilling Services Pvt Ltd – JV through subsidiary – will aim to do business of supplying oil field equipment to the oil & gas industry and to undertake EPC contracts.
Synergy benefits to enter into niche business vertical of EPC
• Dolphin Offshore Revival: Revival process is progressing as per expectations & we estimate Dolphin to contribute to revenues from H2FY24 onwards. Dolphin has started getting EOIs and is evaluating the best option.
CONCALL:
• In process of getting Dolphin Offshore listed on stock exchanges as per regulatory requirement and are expecting to get it listed soon. (In a couple of months)
• FOCUS ENERGY JV: A potential big growth driver: This JV would help us to qualify for the bidding higher capacity of drilling rigs. See currently, what we have been drilling is up to 1000 horsepower drilling rig tenders. Now we are focusing to get into 2000 and beyond horsepower tenders. So, since Focus has already got that experience, we have done a JV with them, which will enable us to get technically qualified and participated in all those standards that we are looking forward to.
The role of JV partner would be providing the technical knowhow, as far as the operations are concerned. Our role would be to operate the rigs with the technical guidance given away by the JV partner.
We believe that in the days to come, these rigs would also get more popular and that is the reason we got into this JV. I believe around 15-20 rigs would be something that would be required in 2 years or 3 years down the line and so that opens a great opportunity for us to enter here.
2000HP VS 1000HP Drills: Margins, it is more or less similar to the one, but yes, the size matters a lot. I won’t say it would be exactly the double, but yes, in a way it would be close to 70%-80% more rates than what 1000 horsepower rigs are normally fetch. So, it definitely would add to a lot of numbers in terms of revenue and also the margin.
Cost of this 2000 HP drilling rig - Would be in range of Rs. 80 to Rs. 100 crore depending on the total requirement of client because the overall accessories requirement is differing from client to client. 1000 HP is around Rs. 45 crores
CAPEX will only be post we win an order.
Already started bidding for contracts in JV. A single contract can be in range of 150 to 250 crore types. mobilization of these orders would take anywhere between 6 to 8 months as usual
• EUROGAS JV: The scope of the JV partner would be providing the technical knowhow.
It would be asset light because this would be like procurement and then transferring, so it won’t be on the asset heavy model. It is basically an asset-light model.
• Dolphin offshore tax benefit: Tax benefit from carry forward losses will definitely be available to us and it is a quite good in amount. Fy25 tax would be practically NIL.
• Our immediate target for Dolphin is to revise the current assets that we already have and the asset that what we are talking about is the Vikrant Dolphin that we have in Mexico. We are already undergoing the repairs and maintenance for that barge and we expect that to be over in next 2-3 months at the most. And we have already started looking for the clients.
From Dolphin, currently what we are doing the refurbishment job of a particular equipment. There, we are expecting revenue of almost Rs. 90 to Rs. 100 crore a year from FY25 onwards
• Bidding pipeline: The bidding pipeline, we can say that the bidding pipeline is as good as more than Rs. 500 crores of bids and we expect them to get it converted into orders probably in next one quarter or so. So, we expect some good amount of conversion into the existing bidding pipeline and further this bidding pipeline is consistently increasing month on month. So, we are envisaging good amount of demand in our services going forward.
• Order book Growth: So, in our business space, we are expecting and we are envisaging good amount of demand for our services and we believe this order book should grow further from this. And yes, we expect on conservative basis minimum 20% of growth.
3 Likes