Deep Industries Q1 FY27 earnings call

The global energy landscape is undergoing a significant shift, with the Strait of Hormus still operating under restricted capacity due to geopolitical friction. Global oil demand is projected to rebound sharply through FY2027, primarily driven by Asian economies. The overarching theme is energy security, with natural gas firmly established as a critical bridge fuel. Emerging markets like India and China are accelerating LNG regasification infrastructure investments to insulate domestic manufacturing from crude market volatility^🌐.

India's regulatory policy has dramatically shifted in favor of domestic exploration and production (E&P) players, aiming to reverse a decade-long decline in crude oil production (which fell from 28.4 MMT in FY24-25). The government is pivoting from a revenue-sharing mindset to an aggressive exploration-first agenda. Initiatives include the unified pipeline tariff to create a democratic national market and an INR80,000 crore incentive package under the 'Samudra Manthan' mission to derisk deepwater exploration, with the government bearing 50% of exploratory well drilling costs.

Deep Industries operates across four main verticals: gas processing (including compression and dehydration), integrated project management (turnkey solutions for drilling and well completion), production enhancement contracts (PEC), and offshore services. The company boasts the largest gas compressor fleet in India with over 80 units and is the first Indian company to offer integrated solutions. Its PEC contract with ONGC, valued at INR1,402 crores over 15 years, aims to boost hydrocarbon production and extend field lifespan.

Deep Industries took over the PEC field in April 2025, but incremental production was delayed by 5-6 months due to an incident at Mori 5 well. Management expects incremental production to start contributing by October 2026 and plans a capex of INR150 crores by March 2027 for new wells. The current PEC contract is expected to generate over INR150 crores in revenue for FY28. The company is also evaluating new PEC tenders, including those from ONGC.

The company expanded into offshore services by acquiring Dolphin Offshore Enterprises through NCLT in 2022, gaining control in January 2023. The DP2 barge, Prabha Barge, is operational and is expected to contribute over INR150 crores annually. Deep Industries is pursuing a disciplined contract-backed fleet expansion strategy and is actively evaluating national and international tenders for offshore support services, with significant growth anticipated in the next 2-3 years.

In FY26, Deep Industries entered an MoU for green hydrogen business, aiming to bid for and execute project tenders. The company is also exploring geothermal energy resources, leveraging its extensive onshore drilling experience for subsurface extraction techniques. Existing expertise in gas processing is expected to be crucial for scaling hydrogen initiatives, and the company is evaluating various types of hydrogen energy production.

For Q1 FY27, Deep Industries reported a revenue of INR278.92 crores, marking a 40% year-on-year growth. EBITDA increased by 38.7% YoY to INR131.8 crores, with the EBITDA margin maintained at a healthy 43.6%, consistent with the company's 43-45% range. Net profit for the quarter was INR89.14 crores, a 44.5% increase YoY. The company's order book stood at INR3,047 crores as of June 30, 2026, with over 60% expected to be executed in the next 2-2.5 years, and approximately INR800 crores in FY27.