Asian Energy Services Limited — Q1 FY26 earnings call

Call held 8 Sep 2025

Management summary

Asian Energy Services Limited announced the Board's approval for the merger by absorption of Oilmax Energy Private Limited and the completion of the Kuiper Group acquisition. This strategic move aims to create a larger, integrated energy and minerals company with enhanced capabilities and a strengthened balance sheet. While a significant INR865 crores order from Vedanta was highlighted, concerns were raised regarding the transparency of Oilmax's financials and the impact of increased GST rates.

Highlights

  • Merger by absorption of Oilmax Energy into Asian Energy Services Limited approved by the Board, expected to create a larger, integrated entity.

  • Acquisition of Kuiper Group, an oil and gas service company based out of U.A.E., completed earlier in September 2025, opening international expansion opportunities.

  • Secured a significant INR865 crores order from Vedanta for a full field development plan, demonstrating a replicable integrated service model.

  • Oilmax Energy is characterized as a 'negative working capital business' and 'cash-rich company', expected to reduce combined working capital days and improve financial position.

  • The pro forma merged entity for FY25 is projected to have a net cash balance sheet, strong EBITDA margin, and healthy ROCE and ROE.

Concerns

  • Management declined to provide specific revenue and EBITDA numbers for Oilmax Energy for FY23, FY24, and FY26, citing prematurity or unavailability.

  • The recent increase in GST rates for the oil and gas industry from 12% to 18% poses a cost issue for field ownership, requiring strategic optimization.

  • Analyst questioned the valuation of Oilmax (50x trailing earnings) as potentially high and biased against Asian Energy shareholders, though management defended it.

What they filed

Q1 FY27: revenue up 135.7%, net profit up 116.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue98 92 215 115 102 +4%235 +155%338 +57%271 +136%
EBITDA15 13 31 11 8 −47%28 +115%48 +55%21 +91%
Net profit9 8 23 6 -4 −144%18 +125%33 +43%13 +117%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Debt Debt disclosed
    Oilmax is a cash-rich company. It's a net cash company. So, the entire company will get consumed in Asian. So, there is no additional liability will be coming to Asian books. And the Oilmax corporate guarantees, which Oilmax has provided to support Asian business and Asian growth, will once the company gets merged, so then those corporate guarantees with get canceled because the lenders and everyone will have a direct access to Oilmax cash flow there.
  • M&A Kuiper Group Acquisition · Closed

    Bolsters merger, opens opportunities for combined entity to expand integrated projects across international geographies, provides global platform for O&M services.

    Business aspects expected to improve in 6 months to 1 year.

    Earlier this year, we had announced the acquisition of Kuiper Group, an oil and gas service company based out of U.A.E. And I'm pleased to inform you that earlier this month, the acquisition has been completed.
  • M&A Oilmax Energy Private Limited Merger · Announced

    Transformational leap, builds larger/stronger/future-ready Asian Energy, positions for large integrated projects, strengthens ability to be leading integrated energy/minerals company, creates synergy, closed-loop integrated platform, improves execution speed, strengthens operating efficiency, captures opportunities, strengthens balance sheet.

    Pro forma merged entity for FY '25 reflects net cash balance sheet, strong EBITDA margin, healthy ROCE and ROE. Oilmax is a negative working capital and net cash company, expected to reduce combined working capital days.

    The Board of Directors have approved a scheme of merger by absorption through which Oilmax Energy Private Limited will merge into Asian Energy Services Limited.
  • Liquidity Liquidity disclosed Oilmax is a cash-rich and net cash company. The combined entity for FY '25 reflects a net cash balance sheet. Companies are well capitalized and cash flow generated, with sufficient assets for next 2-3 years growth.
    Oilmax is a cash-rich company. It's a net cash company.

Guidance & targets

Revenue

  • Asian Energy Revenue (standalone) Revenue · FY '26 · Medium confidence INR650-700 crores
    like for FY '26, we had targeted revenue of around INR650 crores to INR700 crores and EBITDA of INR110 crores to INR120 crores for Asian Energy alone.

    — Sumit Maheshwari

Profitability

  • Asian Energy EBITDA (standalone) Profitability · FY '26 · Medium confidence INR110-120 crores
    like for FY '26, we had targeted revenue of around INR650 crores to INR700 crores and EBITDA of INR110 crores to INR120 crores for Asian Energy alone.

    — Sumit Maheshwari

Merger Timeline

  • Merger Completion Merger Timeline · by September/October 2026 · High confidence ~12 months
    the merger process will take between roughly around 12 months to complete. So even if taking the 12 months into the picture, the merger will get completed only by next September, October.

    — Sumit Maheshwari

Production

  • South Rewa CBM Commercial Production Start Production · by March 2028 · Medium confidence ~2.5 years
    This field, like I mentioned earlier, is under development. And it will take about 2.5 years to start commercial production from there.

    — Kapil Garg

Capacity

  • DNPL Pipeline Capacity Expansion Capacity · High confidence 2.5 million cubic meters a day

    Previously 1 million cubic meter a day → 2.5 million cubic meters a day

    it currently transports about 1 million cubic meter a day, and there's already a plan to expand that to 2.5 million cubic meters a day.

    — Kapil Garg

  • DNPL Pipeline Capacity Feasibility Study Capacity · Low confidence 6 million cubic meters a day
    And then there's a feasibility study going on to further increase it to 6 million cubic meters a day.

    — Kapil Garg

Business Performance

  • Kuiper Group Business Improvement Business Performance · 6 months to 1 year · Medium confidence Improved business aspects
    in a longer run, maybe after 6 months, 1 year, we will see the business aspect getting improved because of this

    — Sumit Maheshwari

What to watch in Q2 FY26

Oilmax Financial Disclosure

Post-merger completion (expected Sept/Oct 2026)
Current Not disclosed, deemed 'not handy' or 'premature'
Target Specific revenue and EBITDA numbers for FY23, FY24, and FY26

Why it matters

Essential for investors to fully assess the financial performance and value contribution of the acquired entity.

Vaibhav, we'll provide you separately. Currently, we do not have those numbers handy with us.

Risks & concerns

  • Oilmax Valuation Perception

    medium

    Analyst questioned the 50x trailing earnings valuation for Oilmax, suggesting it might be biased against Asian Energy shareholders, despite management's defense of independent valuation.

    Analyst defended

  • Increased GST Rate for Field Ownership

    medium

    The government's increase of GST from 12% to 18% for the oil and gas industry poses a cost challenge for owned assets, as oil and gas are not covered under GST, requiring strategic optimization.

    Both acknowledged

  • Oilmax Financial Transparency

    low

    Management declined to provide specific historical and future financial projections for Oilmax, citing prematurity until merger completion, which could lead to investor uncertainty.

    Analyst deferred disclosure

Q&A highlights

5 direct, 1 evasive
Oilmax Valuation and Promoter Holding Partial
The valuation has been done by the independent valuer appointed by both the Boards. So they have done the valuation taking all the possible parameters for the company. Just to highlight you, as I mentioned on the call also, Oilmax valuation has been done by the independent valuers based on the DCF method, which is a risk-adjusted DCF method for all the assets along with the proven reserves and potential risk-adjusted factor.

Analyst questioned the high valuation (50x trailing earnings) for a related promoter entity and the potential impact on promoter shareholding post-merger, raising concerns about fairness and future capital structure.

Asked by Vinod Darjee

Oilmax Financials Disclosure Evasive
Vaibhav, we'll provide you separately. Currently, we do not have those numbers handy with us.

Asked by Vaibhav Mishra

GST Rate Increase Impact Direct
Yes, you're right. Unfortunately, the government has changed the GST rate for the oil and gas industry from 12% to 18%. But now there are 2 aspects to it. We just talked about the contract similar to like Vedanta contracts or the third-party O&M contracts we have. There we will be cost neutral because the client will pay for the GST. The issue comes when we have the field ownership because as you are aware, oil and gas is not covered in the GST.

Identified a direct cost pressure for the company's owned assets due to the GST rate increase, requiring strategic adjustments to mitigate the impact.

Asked by Ashwani Agarwal

Oilmax Asset-Light Nature Direct
Oilmax business is also not an asset-heavy business. As we explained, Oilmax business, we are focused on discovered and developed assets. So Oilmax business is also a very asset-light business where conventionally we have focused always on -discovered and very low capex business model.

Clarified the capital intensity of the acquired Oilmax business, addressing a potential misconception about its asset-heavy nature and its implications for the combined entity.

Asked by Balasubramanian

Vedanta Order and Replicable Model Direct
Vedanta contract is basically the implementation of the full field development plan approved by the Government of India for the field. It includes drilling of new wells, build facilities to connect the new wells, and then operate the whole field so basically, as I was explaining in my talk earlier, Oilmax brings the subsurface modeling expertise and the drilling expertise to the table. And Asian already has proven expertise in the operation maintenance services. By combining the 2 strengths, we have been able to offer this package service to Vedanta.

Highlighted a significant new order and validated the integrated service model as a key strategic advantage, suggesting its replicability for future contracts.

Asked by Balasubramanian

Working Capital Impact of Merger Direct
The working capital day of the merged entity will definitely get reduced because Oilmax is a negative working capital business. The oil and gas are being currently sold -- the oil is being sold on cash and carry basis. And the gas is a cycle of 15 days billing and the payment of 7 days. So Oilmax is a negative working capital company. So it will increase the overall working capital it will reduce the number of working capital days on the merged entity basis, and it will significantly improve the financial position of the company in terms of the assets, net worth and other financial leverages and strength.

Provided a clear positive financial impact of the merger, specifically on improving the combined entity's working capital efficiency and overall financial strength.

Asked by Charvin Chandrashekar

Oilmax Contingent Liabilities/Debt Direct
So, there are no contingent liabilities in Oilmax books. In fact, Oilmax has provided guarantees in excess of INR150 crores to various bankers to support Asian Energy banking facilities and everything. So -- and Oilmax is a cash-rich company. It's a net cash company.

Reassured investors about the financial health of Oilmax, confirming the absence of contingent liabilities and highlighting its cash-rich status, which will benefit the merged entity.

Asked by Vinod Darjee

3 min read 6 chapters

Detailed narrative

Strategic Merger with Oilmax Energy

Asian Energy Services Limited announced the Board's approval for the merger by absorption of Oilmax Energy Private Limited. This strategic move aims to create a larger, stronger, and integrated entity, positioning it to bid for large, integrated projects across field development, O&M, well drilling, and related services. The merger combines Oilmax's asset ownership (producing and development fields in Assam, Gujarat, and a CBM block) with Asian Energy's technical and project execution expertise in seismic, EPC, and enhanced recovery. The combined entity is expected to have a net cash balance sheet, strong EBITDA margins, and healthy ROCE/ROE for FY25 pro forma.

Kuiper Group Acquisition and International Expansion

The merger strategy is further bolstered by the recent completion of the acquisition of Kuiper Group, a UAE-based oil and gas service company, earlier in September 2025. Kuiper Group's operations across the Middle East and Southeast Asia are expected to open up opportunities for the combined entity to expand integrated projects and O&M services across international geographies. Management anticipates business aspects to improve within 6 months to 1 year due to this acquisition, leveraging Kuiper's reputation and operational footprint.

Vedanta Order and Integrated Service Model Success

Asian Energy recently secured a significant INR865 crores order from Vedanta for the full field development plan of a field. This contract exemplifies the successful integration of Oilmax's subsurface modeling and drilling expertise with Asian Energy's proven O&M services. Management highlighted this as a 'highly optimized model,' suggesting it is a replicable strategy for future large contracts and positions the combined entity as a leader in integrated service offerings.

Oilmax Asset Portfolio and Production Updates

Oilmax Energy's portfolio includes producing assets such as the Amguri field in Assam, currently yielding 220,000 cubic meters of gas per day and 300 barrels of condensate. The Indrora field in Gujarat is producing about 100 barrels of oil per day, with a drilling campaign planned within the next month. Development is also underway for the Duarmara and Tiphuk fields in Assam, with production expected later in the year. Efforts are focused on connecting Assam fields to the Indradhanush Gas Grid to resolve gas bottlenecks and ramp up production significantly.

Financial Impact and Valuation of Merger

The merger is structured with a swap ratio of 117 shares of Asian Energy for every 10 shares of Oilmax, with Oilmax's existing 60.83% (55% fully diluted) shareholding in Asian Energy to be canceled. Management emphasized that Oilmax is a 'negative working capital business' and a 'cash-rich company,' which is expected to reduce the combined entity's working capital days and significantly improve its financial position. The valuation, conducted by an independent SEBI-registered valuer using DCF and market-based approaches, was defended as 'very conservative' and 'more favourable to the Asian retail shareholder' despite analyst concerns about a 50x trailing earnings multiple.

Regulatory Environment and GST Impact

Management noted a supportive policy environment, including the unlocking of CRZ areas for E&P and the Oilfield Regulations and Development Act (ORDA), which provides fiscal guarantees and stability, enhancing sector attractiveness. However, the recent increase in GST rates for the oil and gas industry from 12% to 18% presents a challenge for field ownership, as oil and gas are not covered under GST, necessitating strategic optimization. For service contracts, the GST increase is cost-neutral as clients bear the cost, and the merger is expected to help plug inter-company GST leakages.

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