Deep Industries (DIL)

Deep Industries Limited (DIL) Earnings Conference Call Summary Q2FY25: My Notes

Financial Performance

• DIL reported strong quarterly and half-yearly performance.
• Consolidated revenue increased by 29% to INR 130.62 crore in Q2 FY25 and 25% to INR 240.7 crore in H1 FY25.
• EBITDA rose to INR 64.6 crore in Q2 FY25, with EBITDA margins at 46.9%.
• Half-yearly EBITDA grew by 46% to INR 126.4 crore, maintaining margins around 45%.
• Q2 FY25 net profit stood at INR 41.5 crore, up by 40% year-on-year.
• Half-year net profit was INR 80.29 crore, marking a 32% year-on-year increase.
• The order book reached INR 2,622 crore, a 119% increase compared to Q2 FY24.

Operational Performance

• Contract with ONGC is for INR 1402 crore while majority of revenue is expected to be booked in the first 10 years only. Through this contract, all services revenue linked to production increases.
• The update on the Barge asset Prabha is that the refurbishment is now in the final stage of completion, and company expects it to contribute to revenues from quarter 4 onwards. The refurbishment process has taken a little more time than their initial estimates.
• Barge rate is in the range of USD 50,000-55,000 per day, while management expects it will be operational for 330 days in a year, although only 90 days revenue will be booked in FY25. Approximately INR 130 crore opportunity from Prabha in FY26. Management is evaluating whether to put it on charter hire for long term or short term.
• Considering the production enhancement contract and “Prabha” asset deployment, the company anticipates 35% growth in top-line in FY25. They estimate FY26 top-line to reach around ₹800 crore.
• Going by the guidance of 35% growth in FY25, this year Deep will do INR 570 crore topline, out of which standalone will contribute INR 450 Crore, other subsidiaries will do INR 50 crore and Dolphin will contribute INR 70 crore.

• Estimating USD 2-3 million in H2 from Dolphin contract immediately after Diwali.
• Arbitration award of INR 33 – 35 crore is expected to be received by this year, taking time since these clients are PSU’s.
• Excluding Dolphin debtors, normal debtor days are in the range of 90-100 days only.
• Reason for not going in the offshore drilling business as explained by the management.

• Breakdown on the revenue contribution on the 3 rigs which is going to be operational in next year.

• RAAS will not contribute more than INR 15 – 20 crore a year, as demand is not picking up in the booster segment.