Deep Industries (DIL)

Positive for their “Dolphin” acquisition.

• 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.

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A summary of the Deep Industries opportunity

  • 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.

  • 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.

  • RAAS compressors contribution is negligible, so ignoring it for now.

  • 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.

  • Net cash of about 60 cr. in hand.

  • 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.


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.


• 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.
• 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.


Any update on Q2 FY24 result and business outlook

I think the Q2 results and call was pretty decent. Numbers are back filling. Yet to reflect in numbers IMHO.

Some brief updates are

  1. Q3, Q4 expected to better. Overall 400 cr. revenue and 120 cr. bottom line for FY24 seems a done deal with some minor scope for positive surprise. For FY25, a ~20-25% growth in topline in deep business doesn’t look out of place, given the order book. So FY25 rough expectation could be 480-500 cr. topline with 140-150 cr. PAT.
  2. Dolphin will start contributing to topline from Q4, with majority of contribution to come from FY25. 100 cr. topline with ~60% EBITDA margin is expected in FY25. We can say, PAT could be roughly between 40-50 cr. as there could be some tax benefits due the accumulated losses.
  3. So overall it seems FY25 could be a 580-600 cr. topline with ~200 cr. bottom line. This is of course a picture perfect bull thesis :slight_smile:
    All this for an EV of nearly 1500 cr.

You can build the bear thesis.


Deep Industries Limited Q2 FY '24 Earnings Conference Call, the company provided detailed insights into its financial and operational performance. Here’s a comprehensive summary of the call:


  • The conference call was hosted by S-Ancial Technologies Private Limited and featured Mr. Paras Savla, Chairman and Managing Director, and Mr. Rohan Shah, Director of Finance and Group CFO of Deep Industries Limited.
  • The call began with a reminder that participant lines were in listen-only mode, followed by an opportunity for questions.

Key Highlights:

Order Book and Revenue Growth:

  • The company explained that there is a lag of about six months between order book growth and realizing revenue.
  • The order book stood at INR 1,195 crores, reflecting a 47% year-on-year increase.
  • Deep Industries was confident about exceeding INR 500 crores for FY '25, driven by the order book and Dolphin Offshore revenue.
  • They anticipated revenue growth in Q3 and Q4, expecting to achieve their growth targets.

Funding and Capital:

  • Deep Industries reassured that they were financially well-equipped to handle the expected growth in the business. They had minimal debt and were net debt-free.

Dolphin Offshore:

  • The company discussed their plans for Dolphin Offshore, including refurbishing a barge and shifting its jurisdiction for potential tax benefits.
  • Revenue from Dolphin Offshore was expected to commence in Q4, with strong margins in the range of 60-70%.

Capex Plans:

  • Deep Industries had capex plans for acquiring drilling rigs and gas processing packages.

Joint Ventures:

  • They discussed two joint ventures, with the first JV failing to qualify for a specific drilling rig requirement.
  • The second JV with Euro Gas was still under evaluation, and they expected results in the coming months.

RAAS Segment:

  • Deep Industries reported that the order book for RAAS was around INR 50 crores.
  • Execution had faced delays due to customers seeking extensions for their projects, but demand was expected to pick up in FY '25.

Order Inflows:

  • The company had a substantial bidding pipeline of around INR 800 crores, with high expectations of conversion in the coming months.
  • While the percentage of successful conversions could vary, they remained confident in securing significant orders.

Client Contribution:

  • ONGC was the largest client, accounting for around 65% of the order book, followed by Vedanta and Oil India.

Cash Flow and Investments:

  • The INR 100 crores listed under the “sale of investments” in the cash flow statement represented the transfer of funds from investments to fixed deposits.


  • Deep Industries expressed optimism about future revenue growth and order book conversion, particularly in the second half of FY '24 and FY '25.
  • They emphasized a strong focus on margin maintenance and improvement, along with preparedness for business growth.

Overall, the call provided a comprehensive overview of Deep Industries’ financial and operational performance, order book growth, and plans for the future, including the expected contributions from Dolphin Offshore and joint ventures.


Some of the Points, I would like to see in future: (Base on presentation)
1.Implementation of fully mobile units, facilitating swift relocation to any part of the country within a few months. Proactive forecasting of contract renewals enabling optimal resource planning in advance. Minimization of time drag for subsequent optimization and utilization of equipment between contracts for any re-engineering or client related re-configurations as they are finalized in the final 3-4 months of the prior contract period.
2. Expertise in providing Value added services for our clients which in turn improves their revenue generating ability as well as profitability at large and provides a diversified service mix for their product portfolio.

EV: Yes, more or less is same in my calculation.

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  1. Order Book Growth: The company’s order book has shown resilience and continuous growth for ten consecutive quarters. It now stands at an impressive Rs. 1,195 Crores.
  2. EPC of Gas Processing Facility: The company has ventured into the charter hire basis for gas processing facilities, opening up a new revenue stream.
  3. JV with Euro Gas S.R.L: The joint venture allows the company to enter the EPC and supply of superior oil and gas field equipment.
  4. Dolphin Offshore Revival: Dolphin Offshore successfully executed a QIP (Qualified Institutional Placement) of Rs. 38.5 Crores, allotting 8.42 lakh shares at an issue price of Rs. 458.
  5. Order Book Highlights: The company secured a significant order from ONGC for charter hiring of HP compressors in Assam worth INR 108 Crores. Additionally, there’s a robust bidding pipeline, indicating potential future order book growth.

Does anyone have any more information on why they didn’t qualify for the bid with the JV? The con call didn’t quite specify why. Thank you!

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Any update?? What is happening in the company?

• 97cr new awards for the quarter. Order Book at Rs. 1200 Crores.

• International: Deep International DMCC has supplied a modular compression station for a client in Egypt to counter well head pressure reduction and maintain well head gas production. The project was executed on a Build/ Own/ Operate basis with the partner in Egypt.

Middle East Fast Track Compressor Overhaul – The Company has supplied quantity four gas compressor packages for a debottlenecking project in Gulf for a client.

Deep Onshore Drilling Service Private Limited, a subsidiary company of Deep Industries, entered into a JV with Euro Gas Systems to enhance the company’s technical expertise and know how to further support gas field services.

• Beluga International DMCC100% Dolphin owned subsidiary incorporated in Dubai The charter hiring of Dolphin’s Barge would be done under this entity

Kuwait Oil Company (One of the largest Oil Producer in the world) exclusively shortlists qualified enterprises, with Deep, being one of the selected few. Moreover, the favourable day rates in the Gulf region should potentially enhance our margin expansion.

• The industry exhibits relatively subdued competition, largely attributable to its significant capital-intensive nature, operational efficiencies and extreme discipline in leverage.

a history of never exceeding a D/E ratio of more than 1, signifying sound financial management and a low-risk profile.


• Bidding pipeline of around INR500 crores plus with increasing trend.

• Demand environment is particularly looking very exciting, as fresh large capex plans have been announced by not only the PSUs, but also large private players. Further, the current demand scenario is so strong, the services business like us are operating at nearly full capacity, which is facilitating benign pricing environment in medium to long term. Strong demand environment, coupled with benign pricing outlook is ensuring profitable and durable growth in coming years

• In oil and gas, Vedanta Group Company has announced $700 million investment to enhance drilling infrastructure at its 100 exploratory wells in the country. We remain optimistic about the robust bidding pipeline for Deep, which is expected to remain strong in foreseeable future.

DOLPHIN OFFSHORE: On a full year basis, expect almost INR90 crores to INR100 crores top line from Dolphin. Dolphin, we are looking operating margin of more than 50%.

We have already started giving some expressions to our clients. We are working on bidding some of the tenders in offshore space. So I think it will still take us a quarter more to get – because there was a lot of things to be done to revive the company, get the documentation done and all. So I think in next quarter, we should be in a position to bid for these tenders. And we can – we are sure that we will have a huge amount of outcome coming in because as it is, there is a huge demand in the industry and there is a lot of vacuum for the services provider in this segment.

20-25% sales growth for next FY. So, we are anticipating minimum 25% growth year-on-year in Deep Industries itself. So, the way our bidding pipeline is increasing and the conversion which we are expecting out of this bidding pipeline can definitely help us in growing 25% CAGR.

• Steady state operating margin should be in the range of 42% to 45% EBITDA

• Euro Gas (EPC JV) tender is already bidded and it is under evaluation and we are expecting the tender to convert soon.

KUWAIT OIL: So, in Kuwait Oil, we got qualified for various capacities of rigs. The tender is already published by Kuwait Oil Company. And I believe it is due in March or April. So, the size is huge, but our company in India intending to bid some of the rigs in that region. So that will depend on the market intel that we are working on. So having said that, getting qualification in KOC in itself is a big task. So, once we have got qualified now, that stands another chance that we would be allowed to bid for those tenders. Outcome, of course, depends on the tenders once they are submitted. But the opportunity is big. In terms, I believe they would be asking more than 25 to 30 rigs, although we are not going to bid for all of them, maybe a few of them. But that will depend as the dates progress near.

2 NEW RIGS: Selan rig is already under mobilization and maybe a week from now, the operations will start. Regarding the rig that we had ordered for Bokaro is already ready. We had already done a third-party inspection. It’s lying in China. So, in all probability, we expect that the rigs would get shipped in March and we would be in a position to start the operations probably in April or May.

Q3 and Q4 put together, the quantum of capex would be around INR100 crores.

Q4 to be better than Q3.


One more point to be added on based on concall:
20-25% sales growth excluding Dolphin and expected full year Dolphin revenue 90-100 Crores.


Can Dolphin🦈 Offshore give extra miles to Deep?

Q1 (Standalone Revenue): Considering the bid pipeline and the current order book that we have, what kind of numbers are we looking for FY '25 in terms of top line, and bottom line internally as a target?
A1: We are anticipating a minimum 25% growth year-on-year in Deep Industries itself. So the way our bidding pipeline is increasing and the conversion that we are expecting out of this bidding pipeline can definitely help us in growing 25% CAGR. (Estimated revenue for the current FY ~ 440-450 Cr)

Q2 (Standalone Margin profile) : what should we consider to steady state operating margins?
A2: State operating margin should be in the range of 42% to 45% EBITDA.

Q3 A (On Dolphin) : All right and that is just for Deep Industries. And sir, for if we add Dolphin as well, that should add another INR80 to 100 Crs, if I am not wrong?
A3 A: Correct

Q3 B: What was the revenue contribution for Dolphin in FY '24?
A3 B: Dolphin in FY '24 is negligible. So – since its major asset is under refurbishment, it has contributed around just INR8 crores in this year.

Q3 C: What kind of operating margins are we looking at for Dolphin?
A3 C: Dolphin, we are looking operating margin of more than 50%.

Part 1:
Now clubbing Q1 & Q3 A: FY 25, Projected revenue of the company
Deep: Rs 450 + 25% incremental revenue or conservatively 20%, then Rs 550 Cr
Dolphin: Rs 80-100 Cr ~ conservatively Rs 50 Cr
Total FY25 (P) Revenue: Rs 600-650 Cr

Part 2:
Q2 & Q3 C: Estimated EBITDA
Deep: Rs 550 X 42% = Rs 230 Cr
Dolphin: Rs 50 X 50% = Rs 25 Cr
Total FY25 (P) EBITDA = Rs 255 Cr (~ Minimum Rs 250 Cr)
And Maximum Side ~ 300 Cr


Non cooperation by Issuer

CRISIL Ratings has been consistently following up with Deep Industries (DI) for obtaining information through letter and email dated January 05, 2024 among others, apart from telephonic communication. However, the issuer has remained non cooperative.

‘The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix ‘ISSUER NOT COOPERATING’ as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with ‘ISSUER NOT COOPERATING’ suffix lack a forward looking component.’

I learnt from @Worldlywiseinvestors that it is a red flag … not personally but through their videos .

Your views please noob here

Credit Rating Letter dated 04012023 (1).pdf (1.2 MB)

Actually, they have discontinued with CRISIL and shifted to Care!!!


Deep Q4 FY24.pdf (7.3 MB)

Quarterly and Annual result - FY24

Management is very confident about ~ 25% yearly growth and maintained overall EBITDA margin ~ 42% + in next 2-3 years