DEEP INDUSTRIES TO NDTVProfitIndia (KYC)
Over 90% Services Out Of ONGC Suspensios
ONGC Has Revoked Provisional Suspension
Maintain 30-35% Growth Outlook On Yearly Basis
Expect To Reach 50% EBIDTA Margins In 2 Years
Margins Are On An Improving Trend
Expect Govt Push To Benefit Our Services
Demand Likely To Increase In Current Scenario
Good notes on DEEP Industries
Deep Industries - From Service Player to Integrated Energy Platform
Revocation + Demand Surge + Execution = Multilayered Re-rating Setup 
The BIG Trigger - Suspension Revoked = Growth Engine Reopened
âMore than 90% of our services are out of provisional suspensionâ
Can now bid again for ONGC across key segments
Earlier restriction = growth cap â Now fully unlocked
This is not incremental. This is a structural reset of opportunity size
Macro Tailwind - India Energy Security Shift
âDemand in our business is likely to go up⌠domestic production focusâ
Geopolitical tensions â Push for local production
Higher domestic drilling â More service demand
Deep positioned as direct beneficiary of this policy shift
This is a sector tailwind, not company-specific luck
Order Book Strength + Pipeline Visibility
âBidding pipeline is quite heftyâ
Current OB ~ âš3,000 Cr
Expect strong order conversion in next 2 quarters
Key Insight:
Order book is not peak â Next leg of expansion is loading
Growth Guidance Already Strong (With Upgrade Optionality)
â30 to 35% growth⌠may go higherâ
Base guidance: 30 to 35% YoY
Demand surprise â Potential upgrade ahead
Market loves upside surprises, not just guidance
Fleet Utilisation - Silent Earnings Multiplier
âAlmost entire fleet is utilizedâ
Full asset deployment after many years
Strong demand absorption visible
High utilisation = operating leverage kick-in
This is where EPS acceleration begins
Margin Expansion - Real but Phased
â50% margins possible⌠over 2 yearsâ
Current: ~45 to 46%
Short term: gradual improvement
Medium term: structural expansion
Not hype-driven â Execution-driven margin story
Value Added Bundling = Core Moat Building
âBundling services improves efficiency and marginsâ
Earlier: standalone services
Now: integrated contracts
Benefits:
Better client stickiness
Higher contract value
Margin uplift
Transition from vendor â solution provider
Integration Play - The Real Re-rating Lever
Already covering ~70% of value chain
Target: increase significantly over time
Goal: One-stop integrated player
Integrated players command:
Higher margins
Higher multiples
Stronger positioning
Near Term Trigger - Rig Deployment
âThird rig to be deployed in next 1 weekâ
Continuous asset deployment
Improves revenue visibility
Small trigger â But confirms execution on track
New Vertical - Green Hydrogen Entry
MOU signed for green hydrogen projects
Deep will handle balance of plant execution
Optionality play:
Oil & Gas â Expanding into future energy ecosystem
11 | Kandla Project - Margin Catalyst Ahead
Expected: ~Q2 FY27
Supports chemical consumption internally
Can improve operating margins
This is a hidden margin lever, not fully priced in
12 | Capex = Growth Visibility Continues
âš150 Cr capex planned (PEC business)
Focus: drilling new wells
Growth backed by capital deployment, not just commentary
No Buy/Sell Recommendation
#StocksInFocus #StocksToWatch #Deep #Crude #OIL
I told you the merger will potentially happen.
dis : i am not invested
New order worth 69 Cr. for 3 years: https://www.bseindia.com/xml-data/corpfiling/AttachLive/ae339dd1-2a46-403e-a4c1-12dfd3cad173.pdf
Epilogue
âAll these years that I had spent in the service of mankind brought me nothing but insults and humiliationâ
These are considered to be the final words of Nikola Tesla.
The management themselves acknowledged 8 months back that they will NOT be taking a write off for receivables in FY 2026.
Q4 FY 26, the management wrote off 200 crores of receivables, a major concern of mine.
They were finally pressurized to do so. The accounting, to put it simply, was atrocious. I wonder what was the reason for the sudden change of mind. If you read past concalls, they were going to evaluate receivables for the next 1-2 years, not take a write off in FY 2026, assess situation again in FY 2027, then think of taking a write off.
I think the reason is pretty clear. Even iron melts under constant heat.
I consider this a win in my books. The write offs which would have happened at least 18 months from now, happened this quarter because of the constant pressure.
Deep Industries Q4FY26 Earnings Concall Summary:
Receivables write off: With regards to Kandla, All the receivables are written off now, no legacy receivable pending now to write off. With regards to Dolphin, outstandings are kept in books considering the arbitration award received in our favour. Out of total 160cr dolphin group trade receivables, a good chunk of arbitration award in our favour. Considering that as well as client relationship, we are optimistic about receiving those receivables.
Growth projection for next 2-3 years: with the kind of order book we have and current trend that is going on, we are quite optimistic that the growth we witnessed in the past three years should continue, and it could be more than 25-30%. With the growing trajectory, and the current situation that has arisen with respect to crude oil, it is quite possible to achieve 450-500cr kind of profit till the end of FY28.
Orderbook execution: Currently around 3000cr orderbook, out of which excepting one 15Y contract, more than 800cr kind of orders would be executed for this financial year.
New business areas: We are exploring the possibilities of green hydrogen projects. Coal gasification, geothermal energy is something aligning to our business activity, and we already started to look into it.
Delay in production enhancement scheme: because of an incident that took place at mori well, our activities have been delayed for 1 or 2 quarters. We will try to get it on track in the next 1-2 months, and the projections that we have may come around.
Stop production order was given only for this particular well, we shut off this well for now, and will try to activate it soon. All other wells and areas of production are completely intact.
Spike in revenue of Dolphin in the current quarter: one opportunity ongoing-higher rates in between the contract.
Profitability: In terms of actual profit, profitability would remain intact, however, you have seen margins decline a little bit when compared with the December quarter.
Current bid pipeline: close to 500-600 odd crores (bids already submitted), PEC not included in this pipeline. One PEC tender has recently come out, also for 15 years, yet to bid, good chance to get it.
Effect of Crude oil on order book: Yes, higher price of crude oil affects our order book, sentiments help us increase the demand of services, and it also increases our PEC orderbook. (with increasing gas prices, PEC orderbook can increase upward). (although we donât have a direct impact of crude price in our business).
Asset utilization & Capex: Rig segment-100% assets are utilized, hence if any new order comes we will need to do capex for new rigs. Gas processing segment-still 12-15% assets are available to be utilized, post utilization of that, we will need capex for the same.
Doing capex of around 150cr under PEC this year, and would add few more assets under rig segment and gas processing segment as well. For this year, we are targeting to have a capex of around 300cr, and if we are able to achieve some good order in the offshore segment, then this capex can increase further. Capex will be through internal approval and debt, decided not to go ahead with QIP.
Priorities for years to come: 1. PEC 2. Higher capacity drilling rigs 3. Add fleet into offshore segment.
Roadmap for dolphin & offshore business: offshore market is huge, but selectively picking up as we have just entered offshore segment with one asset only, will try to add further assets in this fleet, one-by-one.
EBITDA margin: would be on growth trajectory in years to come, probably will be able to maintain it around 44-45% YoY, maybe 1-2% less or more.
Green hydrogen potential: just entered on an MOU, so it will be little early to comment on the size of opportunities.
Loan to subsidiaries: Large chunk of it given to Dolphin to set up business, and since now Dolphin is earning quite well, loan will reduce going forward. Received a good amount of loan return from Prabha and going forward this year it would be almost nil.
A wonderfully written article, capturing all the thesis points and risks perfectly.
Deep is a classic example of an asymmetric payoff bet. If PEC and offshore segment execution happens as guided and new PEC contracts added, the earnings and multiple re-rating potential is significant.
Also, theyâre seeding/exploring new verticles like green hydrogen projects, CBM, coal gasification, Higher HP dilling rigs. So these could add to the growth levels.
If market doesnât give it a higher multiple due to sector related and previous corporate governance issues, downside is capped by earnings growth.
As the report said, itâs an evolving story and would be interesting to see how it unfolds.
(âHere is where we land, for now. The growth is real. The balance sheet is clean. The competitive position is defensible. The macro tailwind is genuine. The valuation is compelling on almost any metric you apply. And yet the story has enough open threads, on governance, on sector re-rating potential, on PEC execution, on the accounting clean-up, that we cannot say with complete confidence that the market is simply wrongâ)
DISCLOSURE: INVESTED. One of my highest conviction bets.
Q4FY26:
⢠Long term loans increased from 90 to 135cr yoy.
⢠Provision for doubtful debts and bad debt, written off: 9.7cr vs 0.3cr (written off in dolphin offshore)
⢠161cr remain of old receivables
⢠Operating ROCE â 19% (excluding other income, liquid cash and investments, goodwill and old receivables)
21% (if other income and liquid cash and investments are included)
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⢠Order Book: 3007cr (2967cr PQ)
⢠In January 2026, a gas leak occurred during workover operations at Well Mori #5 in Andhra Pradesh under our Production Enhancement Contract. Our emergency protocols and robust safety systems enabled a swift response; in close coordination with ONGC and regulatory authorities, the situation was fully contained within five days. We are pleased to report there were no injuries or loss of life. While the incident has resulted in a 5-6 months shift in our production enhancement timeline, keeping safety as our highest priority our focus remains on resuming production enhancement operations and meeting our long-term output targets.
⢠Through strategic diversification and expanded overseas operations we have successfully reduced single client dependency to below 40% of total revenue.
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⢠Higher Capacity Drilling Rig Opportunity: Considering huge demand of Onshore Drilling Rigs, under Integrated Project Management the Company is exploring opportunities of entering into higher capacity Drilling Rigs, which can add further to the growth of business.
CONCALL NOTES:
⢠The government has launched special CBM rounds in 2025 and 2026. These unconventional sources are expected to start feeding into the national gas grid by early 2027, particularly in the Eastern states.
⢠GAS LEAK INCIDENT: The incident has resulted into a 5- to 6-month shift in our production enhancement time line.
⢠DOLPHIN LEGACY RECEIVABLES: We have kept them outstanding in our books considering the arbitration awards received in our favor. So out of total INR160 crores of Dolphin Group trade receivables, we have a good amount of arbitration award in our favor. And considering that as well as the client relationship, we are very optimistic on recovering all those trade receivables, and thatâs how we have kept them outstanding.
⢠GROWTH GUIDANCE: FY27 and FY28 we are quite optimistic that this trajectory of growth that has been witnessed in past few years should keep continuing, it could be more than 25% to 30%.
We should be able to maintain EBITDA of 44%, 45% (Including other income). It may vary 1% or 2% here and there, but no major movement.
⢠COAL GASIFICATION: Coal gasification, geothermal is something that is aligning to our business activities. So, we have already started looking into it. And at an appropriate time, we may look into this with a strong commitment as we go forward.
⢠PEC CONTRACT: Our activities have been a bit delayed for a quarter or 2. It should be regularizing in maybe a month or 2 more. But going forward, the projections that what we have should come around. Maybe it will have an impact of maximum 1 or 2 quarters, but everything else is just intact.
Stop production order was given only for this particular well where explosion happened. So, we have already shut off this well for now for all the compliance and regulatory matters. In short span of time, we may try to keep this well activated, but that is again in the eventuality or in the passage of some time. But barring this stop order, this was restricted only to that particular well. All our other activities related to other wells and the areas for gas production, they are completely intact, and we are still producing gas and we are selling the gas.
In PEC, we are having a free gas price mechanism. And with increase in gas prices, this order book can increase upward.
⢠2000 HP DRILLING RIGS: So, these tenders have been coming in the past, but we believe that as we go forward, the kind of inquiries that could be floated from our clients would be much higher in numbers. And we are sure with the qualifications, we will surely qualify for the same. It would be via JV.
If weâre able to secure 2,000 horsepower drilling rig contracts, weâll have to go for a new rig and capex would definitely be there. So, our primary estimate is the rig can be of around INR100 crores or INR100 crores to INR120 crores, but that depends on the availability of equipment as well.
⢠Current bid pipeline â 500 to 600crs.
⢠ORDERBOOK: There are new PECs also coming up. And as I also mentioned, the new opportunities of the higher capacity rigs and all that put together will definitely give an indication of higher order book. So maybe in some quarter or 2, you would see that numbers also coming quite above to what the current levels are.
⢠With regards to PEC, one recent tender has come up, which is yet to bid. We stand very good chance as we are quite capable of executing this kind of contracts with in-house assets and expertise. And this tender is also for 15 years.
⢠Asset Utilization: With regards to rig segment, our assets are 100% utilized. And so, with any new order coming in, weâll have to do capex of new rig. With regards to Gas Processing segment, we have still availability of around 12%, 15%. So, till that extent, we may use our available fleet. And post that, weâll have to go for capex.
⢠Top 3 priorities: PEC is one. Second priority for us is higher capacity drilling rigs. And third priority definitely to add a fleet into offshore segment as well.
⢠CAPEX: We are doing capex of around INR150 crores under PEC this year. And we would be adding a few more assets under rig segment and Gas Processing segment as well. So, we are targeting to have capex of around INR300 crores and if weâll be able to achieve some good orders in offshore segment, then this capex can increase further.
⢠Our services are 24/7, 365 days. So, there is no seasonal effect into it. So almost you can say it would be consistently in same period.
⢠800 crores kind of orders would be executed for this financial year out of current orderbook of INR3,000 crore. And rest, we are expecting some good numbers to add in with newer orders.
⢠DOLPHIN OFFSHORE: So, on revenue front, we believe if weâll be able to secure additional assets, then it will grow way high. But with the single assets which we are already operating, we are expecting top line of around INR150 crores from this financial year and the current FY27 with EBITDA of almost 60%.
⢠GREEN HYDROGEN: So, the intention is to provide a balance of plant, excluding the main equipment. And we are eyeing on converting this kind of project to be given on charter hire. So, we are exploring those opportunities where we can pitch in with our style of work of giving entire project on hiring basis.
⢠RAAS EQUIPMENT: We remain very confident that now online compressor demand has been growing significantly, and we are also trying to develop our net into the online compressor. We have done one trial of making such compressor. We are under testing of these compressors. So, once itâs done and if this demand gets converted from the booster compressors to online, I think we would definitely be participating in this kind of the requirements.
⢠2 drillers, Shivganga and Bvishal, they are about to get listed, and they are also raising a huge amount of money. So, they might be listed at a very good rate. So, I think congratulations on them listing because many investors will be having someone to compare with, right? So Shivganga Drillers has around 5 drilling and Bvishal is into well intervention and also, they are into PEC. So, we might get someone to compare with sir, right?
Yes, yes. So, it is always good to have a peer comparison so that we can show how good we are.
⢠We have a vision for at least 3 to 5 years is something that this kind of a growth (25-30%) should keep continuing.
Now that government has a great move, on this sector, it wonât be surprised company could even get double in next 3 to 5 years.
⢠PRABHA LOAN: Given the rights issue done there, we have received a good amount of loan return back from Prabha. And I think in this year, it would be almost nil now.
THINGS TO TRACK:
⢠PEC Contract âWill the capped well resume production in 2-3 months? Will the revenue generation be as guided? Can the segment surprise on the upside? Any future execution issues.
⢠New Offshore/Marine segments: Apart from the barge, what other segments/assets will the company get and how will its revenue and margins pan out?
⢠Gas Compression and Gas dehydration segments: How much will these be affected by increased competition going forward? Would new segments be able replace their revenue contribution in the long run?
⢠Core orderbook slowdown?: As focus of the management turns to PECâs and Offshore segment, will the core segment slowdown a bit? Increased competition in those segments may have led the management to pivot to these new growth segments.
⢠Kandla energy operations progress: When will operations start? Impact on Ebitda margins and cost savings.
⢠Loan to Prabha energy: Will it reduce as claimed by management?
⢠Higher HP Drilling Rigs: Contract values, margins, capex requirements.
⢠Other segments such as CBM, Coal gasification, green hydrogen progress.
Deep had an incredible operational year in FY26 by all metrics and the next couple of years also seem very strong (Though the delay of PEC contract will somewhat affect growth).
Industry tailwinds appear very robust.
There has been no new acquisition of assets in offshore segment. Is it indicative of lack of decent opportunities? That could affect growth going ahead if theyâre unable to secure new contracts in offshore segment.
But PEC is the biggest opportunity. With open ended pricing and gas prices being higher, the potential for asymmetric growth remains. Itâs now upto management to execute (Well explosion wasnât a good start and shows the risks present).
New PEC contract wins could put Deep into newer orbit of growth and scale.
Higher HP drilling rigs also could a strong growth driver.
ON WRITEOFF and PRABHA LOAN: Management has indicated that Prabha loan would be close to nil by FY27 end. Will need to keep track. If it happens, then along with a cleaner balance sheet and no more exceptional items going ahead (some may happen due to old dolphin receivables), it would mark a significant turnaround in companyâs corporate governance image and thus market perception.
On Kandla writeoff, I maintain my stance that it is of ZERO importance to an investment thesis of Deep. In fact, itâs a positive as the receivables were optically harming the balance sheet and companyâs market perception.
Iâll once again conclude by saying what the bastion report said on Deep
âHere is where we land, for now. The growth is real. The balance sheet is clean. The competitive position is defensible. The macro tailwind is genuine. The valuation is compelling on almost any metric you apply. And yet the story has enough open threads, on governance, on sector re-rating potential, on PEC execution, on the accounting clean-up, that we cannot say with complete confidence that the market is simply wrongâ
DISCLOSURE: INVESTED AND BIASED
Absolute brilliant work. Anyone deciding to invest in Deep Industries without reading this report end to end, you are taking more risk than you know.
Need more people like him to uncover such things.
I have my reservation around it. If would have been good only to the company if they would have got this. If management is cautious and ambitious than this certainly will help. It will help the cash flow as well.
Remarkable how the author really put it in such simple easy to understand words.
Kudos
Kudos to you also ! I assume you are the one who provided masterclass forensic report which was mentioned in the post. I donât know anything about accounting so couldnât understand your posts earlier now everything seems clear what you were trying to show via earlier posts .
I think the credit here goes equally to @parth_agrawal and the Bastion team. I admit I was a bit ignorant earlier and expected people from different fields to understand complex accounting concepts without making my posts in a simpler language. It was unfair of me.
Parth and the Bastion team really extracted the true sense of the report and presented it in a much better way than I ever could have.
Also, I would like to say that the Bastion team has really lived upto what the big investors say about investor psychology. Itâs really hard to look at a good conviction bet with a different angle when supported by new findings!
Cheers to that!
