Deep Industries Limited — Q4 FY26 earnings call

Call held 15 May 2026

Management summary

Deep Industries reported strong Q4 and FY26 results, with significant revenue and EBITDA growth driven by robust execution and new orders. The company improved its return ratios and cash flows while reducing single client dependence. Strategic initiatives in green hydrogen and offshore expansion are underway, though a one-time write-off and a gas leak incident impacted timelines for a PEC contract.

Highlights

  • Operating revenue for FY26 grew by 55% YoY to ₹891 crores, driven by strong execution and new order flows.

  • EBITDA for FY26 increased by 44% YoY to ₹424.82 crores, with Q4 EBITDA growing 71% YoY to ₹106.85 crores, reflecting operational efficiencies.

  • Net profit for FY26 (excluding one-time items) stood at ₹352.9 crores, with cash profit at ₹442 crores and a 46% cash profit margin.

  • Return ratios improved significantly, with adjusted ROE at 21.8% and adjusted ROCE at 19.2%.

  • Net cash flow from operating activities increased to ₹270 crores in FY26 from ₹210 crores in FY25, and the debt-to-EBITDA ratio strengthened to 0.48.

Concerns

  • A one-time write-off of ₹208 crores for Kandla legacy trade receivables was recorded, though it did not impact core cash profitability.

  • A gas leak incident at Well Mori-5 in January 2026 caused a 5- to 6-month shift in the production enhancement timeline for that specific contract.

  • A damaged workover rig incident is under active consideration, with clarity expected in a short passage of time.

Key financials

5 periods

Headline

  • Adjusted ROE
    21.8%
  • Adjusted ROCE
    19.2%

Q4 FY26

  • Operating Revenue
    ₹248.7 Cr
    YoY +49%
  • EBITDA
    ₹106.85 Cr
    YoY +71%
  • EBITDA Margin
    39%

Q4 FY26, ex-one-time

  • Net Profit
    ₹148.6 Cr

FY26

  • Operating Revenue
    ₹891 Cr
    YoY +55%
  • EBITDA
    ₹424.82 Cr
    YoY +44%
  • Cash Profit
    ₹442 Cr
  • Cash Profit Margin
    46%

FY26, ex-one-time

  • Net Profit
    ₹352.9 Cr

What they filed

Q1 FY27: revenue up 39.5%, net profit up 43.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue131 155 167 200 221 +69%222 +43%249 +49%279 +40%
EBITDA57 67 57 82 92 +61%100 +49%82 +44%108 +32%
Net profit42 48 -207 62 71 +69%71 +48%-7 +97%89 +44%
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
  • Capex ₹300 Cr internal accrual and debt
    • PEC contracts ₹150 Cr
    • Rig segment and Gas Processing segment assets
    • New 2,000 horsepower drilling rig ₹100 Cr
    So with regard to capex, we are doing capex of around INR150 crores under PEC this year. And we would be adding a few more assets under rig segment and Gas Processing segment as well. So more or less for this year, we are targeting to have capex of around INR300 crores and if we'll be able to achieve some good orders in offshore segment, then this capex can increase further. ... So our primary estimate is the rig can be of around INR100 crores or INR100 crores to INR120 crores, but that depends on the availability of equipment as well. ... Yes, internal accrual and debt.
  • Debt 0.5× EBITDA
    Our debt-to-EBITDA ratio has improved and remained very strong at 0.48.
  • M&A Kandla Energy and Chemicals Limited Acquisition · Merged

    backward integration, enabling the management to source chemicals and hydrocarbon fluids in-house

    legacy trade receivables of ₹208 crores written off, but did not impact core cash profitability in FY2026.

    with regards to Kandla Energy and Chemicals Limited, we had acquired the company under corporate insolvency and resolution process in March 2025. ... Kandla was eventually merged with Deep Industries Limited effective from 30th March 2026. ... under exceptional item, we have taken write-off of around INR208 crores of Kandla legacy trade receivables after intensive recovery process.
  • Liquidity Liquidity disclosed Net cash flow from operating activities increased to ₹270 crores in FY26 from ₹210 crores in FY2025.
    Our net cash flow from the operating activities have been increased to INR270 crores in FY26 from INR210 crores in FY2025.

Guidance & targets

Revenue

  • Revenue Growth Revenue · next 2 years (FY27, FY28) · High confidence 25% to 30%
    So with the current trend that is going on, we are quite optimistic that this trajectory of growth that has been witnessed in past few years should keep continuing. But our sense is that it could be more than 25% to 30%.

    — Paras Savla

  • PEC Contract Run Rate (Mori-5) Revenue · after operations commence · Medium confidence ₹120 crores to ₹150-odd crores
    So we are already doing some amount of I mean, a reasonable amount of gas production. But as I mentioned, there is a gap of around 1 or 2 quarters for the equipment to be hired and put back to production. So once we have that, it will again regain to what our original projections were.

    — Paras Savla

  • New Rigs Revenue (Q4 mobilized) Revenue · ongoing · High confidence more than ₹1.5 crores a month
    So the new rigs mobilized in Q4 were all workover rigs with 100 and 150 ton capacity. So they would have -- all these three put together would have started contributing more than INR 1.5 crores a month kind of.

    — Rohan Shah

  • Dolphin Offshore Top Line (single asset) Revenue · current FY27 · High confidence ₹150 crores
    with the single assets which we are already operating, we are expecting top line of around INR150 crores from this financial year and the current FY27 with EBITDA of almost 60%.

    — Rohan Shah

Profitability

  • PAT Profitability · FY28 · High confidence ₹450 crores or ₹500 crores
    So with the growing trajectory, I don't see that to be an issue or to be a concern because the growth has already been demonstrated for past few years. And with the current situation that has arisen in relation to the crude oil, I think India has put a lot of focus on drilling activities and trying to produce more of oil and gas. So definitely, this will enhance our business opportunities. And keeping that in mind, I think that could be quite possible.

    — Paras Savla

  • EBITDA Margin Profitability · year-on-year · High confidence 44%, 45%
    And probably what we believe is we should be able to maintain EBITDA of 44%, 45% year-on-year. It may vary 1% or 2% here and there, but no major movement.

    — Rohan Shah

  • Dolphin Offshore EBITDA (single asset) Profitability · current FY27 · High confidence 60%
    with the single assets which we are already operating, we are expecting top line of around INR150 crores from this financial year and the current FY27 with EBITDA of almost 60%.

    — Rohan Shah

ROI

  • ROI on New Capex ROI · ongoing · High confidence More than 20%
    Definitely more than 20% kind of. The opportunities are shaping up with higher capacity, you will have a good margin as well.

    — Rohan Shah

What to watch in Q1 FY27

PEC Contract Operations Resumption

next 1-2 quarters
Current 5-6 month shift in timeline due to gas leak
Target Operations resumed, achieving ₹120-150 crores run rate

Why it matters

Crucial for realizing revenue from a significant production enhancement contract and validating management's revised timeline.

But as I mentioned, there is a gap of around 1 or 2 quarters for the equipment to be hired and put back to production. So once we have that, it will again regain to what our original projections were.

Risks & concerns

  • PEC Contract Delay due to Gas Leak

    medium

    A gas leak incident at Well Mori-5 in January 2026 caused a 5-6 month shift in the production enhancement timeline for that specific contract, impacting near-term revenue realization from it.

    Management acknowledged

  • Damaged Workover Rig

    low

    An incident involving a damaged workover rig is under active consideration, with management expecting clarity in a short passage of time.

    Management acknowledged

  • Order Book Stagnation

    low

    Analyst noted the order book has remained around ₹3,000 crores for several quarters, raising concerns about future growth, though management explained it reflects continuous inflow.

    Analyst acknowledged

Q&A highlights

7 direct
Kandla & Dolphin Receivables Write-off and Recovery Direct
So we have written off all old trade receivables of Kandla Energy. With our extensive effort of recoverability, we decided that it is not recoverable anymore. ... With regards to other legacy trade receivables of Dolphin, we have kept them outstanding in our books considering the arbitration awards received in our favor.

Clarified the one-time nature of the Kandla write-off (₹208 crores) and provided rationale for retaining Dolphin's ₹160 crores receivables, indicating potential future recovery.

Asked by Sudhir Bheda

Growth Projections for FY27 and FY28 Direct
So with the current trend that is going on, we are quite optimistic that this trajectory of growth that has been witnessed in past few years should keep continuing. But our sense is that it could be more than 25% to 30%. ... I think that could be quite possible [for PAT of ₹450-500 crores by FY28].

Management confirmed strong growth guidance of 25-30% for the next two years and expressed optimism about achieving ₹450-500 crores PAT by FY28, driven by sector tailwinds.

Asked by Sudhir Bheda

Impact of Mori-5 Gas Leak on PEC Contract Timeline Direct
So we are already doing some amount of I mean, a reasonable amount of gas production. But as I mentioned, there is a gap of around 1 or 2 quarters for the equipment to be hired and put back to production. So once we have that, it will again regain to what our original projections were.

Addressed concerns about the gas leak incident, clarifying that it caused a 1-2 quarter delay for equipment re-deployment but the overall project projections and run rate of ₹120-150 crores remain intact.

Asked by Manan Shah

Dolphin Offshore Q4 Revenue vs. EBITDA Discrepancy Partial
So in Dolphin, we had a good quarter in terms of revenue. So our revenue has jumped up. And along with it, it was some expenditure has also been rosen. So there was one opportunity ongoing where we had some higher rates in between the contract. ... we always believe that our performance should be evaluated year-on-year basis, not on quarter-on-quarter because it may happen that in one quarter, you have higher repairing expenditure.

Explained that higher expenses on a specific contract opportunity and Q-o-Q repair cycles led to a temporary EBITDA decline despite revenue growth, emphasizing a preference for Y-o-Y evaluation.

Asked by Harsh Shah

Order Book Stagnation and Future Inflow Direct
INR3,000 crores of order book, the kind of implementation or the kind of execution that is done, that has again remained stable. So which means there has been an active flow of orders that have come, and that's how the order book has remained same. ... maybe in some quarter or 2, you would see that numbers also coming quite above to what the current levels are.

Management clarified that the stable ₹3,000 crore order book reflects continuous new order inflows offsetting execution, and anticipates a higher order book in the next 1-2 quarters due to new PECs and higher capacity rigs.

Asked by Manan Shah

Decision on QIP Direct
No. So we have decided not to go ahead with QIP.

Provided a clear update on the previously planned QIP, indicating the company will not proceed with it.

Asked by Parth Agarwal

Green Hydrogen and Offshore Expansion Strategy Direct
So the intention is to provide a balance of plant, excluding the main equipment. And we are eyeing on converting this kind of project to be given on charter hire. ... we have just entered into offshore segment with one asset only, and we wish to add this split to further assets one by one. So we would be going watchful and selective while taking those opportunities.

Outlined the company's strategic approach to new growth areas, focusing on charter hire for green hydrogen and a cautious, selective expansion in the offshore segment.

Asked by Parth

ROI on New Capex Direct
Definitely more than 20% kind of. The opportunities are shaping up with higher capacity, you will have a good margin as well.

Provided a clear target for the return on investment for new capital expenditures, indicating confidence in high-margin opportunities.

Asked by Sudhir Bheda

3 min read 8 chapters

Detailed narrative

Macroeconomic Environment & Sector Outlook

The oil and gas sector is rebalancing, with global oil demand projected to grow by 1.6 million barrels per day in 2027, reaching 106.2-107.8 million barrels a day. India is aggressively expanding LNG infrastructure and pushing natural gas as a bridge fuel. Government policies, including rationalized royalty rates (15-20% deduction on wellhead price) and special CBM rounds in 2025-2026, aim to boost domestic production and reduce import dependency, with a target to connect the national gas grid to almost every state by FY27.

Operational Performance & Business Momentum

Deep Industries delivered consistent operational performance in FY26, maintaining healthy asset utilization across onshore drilling, workover services, gas processing, and production enhancement. The company's order book remains robust, consistently revolving over ₹3,000 crores, providing multiyear revenue visibility. Strategic diversification has reduced single client dependence to below 40% of total operating revenue, positioning the company for continued growth.

Kandla Acquisition & Receivables Write-off

Deep Industries acquired Kandla Energy and Chemicals Limited in March 2025 through a corporate insolvency process, with the merger effective March 30, 2026. This acquisition aimed at backward integration for in-house chemical and hydrocarbon fluid sourcing. Following an intensive recovery program, the company wrote off ₹208 crores of Kandla's legacy trade receivables, a non-recurring and non-cash adjustment that did not impact core cash profitability in FY26. Separately, ₹160 crores of Dolphin Group trade receivables are retained due to ongoing arbitration awards and optimism for recovery.

Financial Performance Highlights (Q4 & FY26)

For Q4 FY26, operating revenue rose 49% YoY to ₹248.7 crores, with EBITDA growing 71% YoY to ₹106.85 crores (39% margin). Full-year FY26 operating revenue jumped 55% to ₹891 crores, and EBITDA grew 44% to ₹424.82 crores. Net profit (excluding one-time items) was ₹148.6 crores for Q4 and ₹352.9 crores for FY26. Cash profit for FY26 was ₹442 crores (46% margin). Adjusted ROE and ROCE improved to 21.8% and 19.2% respectively, with a strong debt-to-EBITDA ratio of 0.48.

Growth Outlook & Strategic Priorities

Management projects revenue growth of 25-30% for FY27 and FY28, with potential PAT of ₹450-500 crores by FY28. Key strategic priorities include production enhancement contracts (PEC), higher capacity drilling rigs, and expanding into the offshore segment. The company aims to maintain an EBITDA margin of 44-45% year-on-year and expects new capex to yield an ROI of over 20%.

Capital Allocation & Debt Management

The company plans a capex of approximately ₹300 crores for FY26, including ₹150 crores for PEC contracts and investments in rig and gas processing assets. New 2,000 horsepower drilling rigs are estimated to cost ₹100-120 crores each. Capex will be funded through a mix of internal accruals and debt. Net cash flow from operating activities increased to ₹270 crores in FY26, up from ₹210 crores in FY25, contributing to a healthy debt-to-EBITDA ratio of 0.48. The previously planned QIP has been decided against.

PEC Contract & Mori-5 Incident

A gas leak incident at Well Mori-5 in January 2026 led to a 5-6 month shift in the production enhancement timeline for that specific contract. While the well was temporarily shut down for compliance, other gas production activities remain intact. Management expects the contract to regain its original run rate of ₹120-150 crores per quarter after equipment re-deployment, anticipating a 1-2 quarter delay. A separate incident involving a damaged workover rig is under active consideration, with clarity expected soon.

Green Hydrogen & Offshore Expansion

Deep Industries has entered an MOU for green hydrogen, aiming to provide 'balance of plant' on a charter hire basis. This is a new vertical, with substantial details expected in 2-3 quarters. In the offshore segment, the company is being selective, having entered with one asset and planning to add more assets gradually. Management views both onshore and offshore exploration as equally promising, with increasing participation from private players alongside ONGC and Oil India.

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