Hi Sahil. I need a clarification. This stock is at ~7 PE. As you say the company is available at 300 crore. And it’s down more than 30% from peak and there’s is hope that revenue will go up. Why do you say that a lot of upside is already captured at such low valuation.
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Anyone attended AGM? Any new news/info revealed by management?
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Credit Rating report on 24th Sept
Management Guidance vs Ground Check
- The management’s revenue guidance from the last concall checks out when validated against current charter rates and expected operating days.
- Assumptions used:
- 340 operating days per rig
- ₹87.5/USD exchange rate
- Pioneer operating at $40,000/day in FY27
- If Pioneer is rechartered at $50,000/day, Revenue and EBITDA could be ~₹30 Cr higher.
The CRISIL report assumes a 32% EBITDA margin, which is slightly conservative compared to the 38–40% margin guided by management.
Thus, JDIL should still be able to generate ~₹600 Cr EBITDA over the next two years, with cash likely retained for refurbishment of rigs coming off charter.
Assuming nothing changes -
| KPI | FY24 | FY25 | FY26 | FY27 |
|---|---|---|---|---|
| Revenue | 617 | 828 | 925 | 900 |
| EBITDA | 139 | 241 | 296 | 288 |
| EBITDA % | 23% | 29% | 32% | 32% |
| EV/EBITDA (Current) | 4.2 | 4.2 | 4.2 | |
| Expected Market Cap | 1,710 | 1,668 | 1,635 |
I have recently came across two articles, both positive on the long term shortage of rigs in global market, but somehow I am unable to find value in current price unless day rates climb up to $90-100k/day for non-harsh deployment [Article #1, Article #2]
Request to please share counter views
Chat gpt used to re-phrame the post
Edit: JDIL has received the BGs furnished against money received from ONGC from Bombay highcourt. The same will be removed from balance sheet
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I was really impressed with the article 1 . But if crude oil prices remain at 60$ , jindal drilling can fall more
Profit Margins have really dipped this quarter, compared to last 3 quarters. The topline is also flattish QoQ, which was expected due to one of the rigs being inoperative. But lower margins was not expected at all, if someone has any understanding regarding this please share here.
Expenses are largely flat (185 Cr in Q2 vs 187 Cr in Q1). However, revenue has dropped by 16 Cr (6%) and correspondingly PBT margin has also dropped from 26% (67 Cr PBT / 254 Cr Revenue) to 22% (53 Cr PBT / 238 Cr Revenue)
This happens when your operating costs are fixed (Regardless of rig being operative or not, salaries have to be paid)
Jindal Pioneer remains the key triggering news. Hoping all these substack articles come true and it gets a rate higher than 60-70k$/day
Source for the numbers - Q2 PPT
Request any member who gets a chance to ask this question in con-call - By when is it expected to get re-hired? As per their earlier guidance, this was supposed to happen by Oct
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Management answered that there is a tender ongoing by ongc where they will participate.they were hopeful of getting north of 50k however the external environment has actually deteriorated since last order and lot of rigs are going to be available from other suppliers.
I guess they will definately get pioneer contracted in this round.however price may be lower. Major monitorable will be repricing for Discovery in first half of next year. The 3 owned rig will determine the profitability for future and considering pioneer will not fetch much, it will be more crucial that they get better rates for discovery.
Disclosure -invested
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Promoter has bought 2% of shares in open market purchase in last few days? should this be taken as a sign for favourable pricing of Pioneer Rig?
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Q3 concall pointers
- Other Income is negative since the award of 100 Cr from ONGC recognised in Q2 has been reversed as ONGC has appealed the earlier High Court decision
- Pricing pressure may come into play since rigs from other players are also becoming available. However, ONGC is expected to float tender for 4 more rigs, and management doesn’t see much interest from international players for ONGC due to their specifications.
- Saudi Aramco has resumed its rig ops and global rates remain upwards of $100k. India rates are still lower due to competition in last tender, and not expected to match >$100k since ONGC won’t be able to manage that. Expect gradual price increases, although no mention of how much time it would take to reach those levels
- Company still owes ~$35M (₹ 315 crores) from Pioneer acquisition which is classified as a current liability, and only has ₹ 90 cr cash+bank on 30th September. The consolidated statements do show current borrowing and other assets, but needs to be seen how this pans out with rather close balances. Also no mention USD hedging assuming payable is in USD. Management gave a logic of having EBITDA of ₹ 350 crores but not sure if that makes too much sense here
- For the 3 rigs getting de-hired in calendar year 2026, company may try for international markets as well but the contracts there are shorter which makes it less favourable.
Opinion - There does seem operational risk in the coming year, should ONGC choose to not float tenders for all 4 rigs. ONGC’s concall is expected to be on 16/17th Feb, so lets see if they mention rig hiring then.
Disc. - tracking, not invested.
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Currently on PE basis stock looks mouth watering but I think there are few uncertainties which makes it bit difficult to commit.
First production at Bombay High is declining. So ONGC hired BP to arrest the decline. BP indeed was able to improve production in north sea and at some other places. But we don’t know will this intervention by reduce the need of rigs or increase the need of rigs.
Globally rig supply is tightening utilisation rates are approaching 90%+. But management seems to be reluctant to explore other markets. That seems to be the case with other rig operators in India because in last tender bids went astonishingly low. So I think if demand goes down a bit price will go down much more because of reluctance of players to move ships abroad and very high running costs for rigs as even standing rigs will eat 20,000 USD almost everyday.
Now this year three rigs going out of contracts we don’t know at what rates they will be hired or they will not be hired if ONGC doesn’t need enough rigs. So it adds another layer of uncertainty here.
It may become investible once it becomes clear how BP suggest ONGC to make changes in the exploration.
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The most important point for me was management change in tone with regard to upward revision of prices from the lows for 35K seen in last tender. In Q2 they were very confident of getting more than 50K saying 35K was unrealistic. In Q3 they didnt commit to any number even though there is ongoing tender from ONGC where pioneer is being bid. Also at one place they mentione this particular tender will conclude today (concall day). however later in same concall they provide a lead time in months for pioneer to get hired. that seems contradictory.Over all business is moving in headwinds with low crude prices and 4 rigs (including Pioneer) needing new contract.
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Below is the perspective shared by the management of Great Eastern shipping on the current situation of the charter rig market. There seems to a marginal uptick, but hardly a broad-based surge in demand. They seem unsure about getting fresh contracts for their soon to be de-hired rigs.
Between now and the end of FY27, Jindal Drilling has 4 out of 6 rigs looking for a new contracts (including Pioneer got de-hired 5 months ago). Their FY28 numbers hinge on this. Will be interesting to track as to when; in which markets; at what rates these 4 rigs get contracted again.
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can some one help in understanding very high volume in this stock for last 2 session. almost 1 cr on 2nd march and 3 cr today. both are higher than the public freefloat.only possibility is that shares are being traded multiple times (possibly HFT).any light on this would help. thanks in advance
I saw this news item today. As mentioned in the article, if they are able to get $100K day rate for Pioneer, that would be a big sentiment booster.
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management didnt give any indication of such high bidding in Q3 concall which happened soon after this tender bidding submission.they even didnt repeat there expectation of 50k+ . so 100K seem far fetched and that too 100K being lowest out of 6 bidders vying for 4 rigs. Better to wait for tender awards. recent situation is definately helpful in negotiation.
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