Deep Industries (DIL)

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:

Introduction:

• 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.

Conclusion:

• 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.