Deep Industries (DIL)

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.