Jindal Drilling And Industries Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Jindal Drilling reported a strong Q1 FY26 with EBITDA up 23% and PAT up 5% QoQ, driven by the Jindal Pioneer acquisition. The company maintains a healthy net cash position of INR112 crores and expects continued finance cost reduction. While ONGC tenders have been sluggish, management provided optimistic FY26 and FY27 financial guidance, anticipating higher rig rates and increased profitability despite upcoming rig refurbishments.

Highlights

  • EBITDA increased by 23% from INR87 crores in Q4 FY25 to INR107 crores in Q1 FY26, driven by recent acquisition and full quarter operations of Jindal Pioneer.

  • PAT increased by 5% from INR53 crores in Q4 FY25 to INR55 crores in Q1 FY26.

  • EPS increased from INR18 to INR19 per share QoQ.

  • Net cash position of INR112 crores as of June 30, 2025, has not changed despite the acquisition of rig, Jindal Pioneer, indicating strong operational profitability.

  • Finance cost continued to decline, reaching only INR2.5 crores in June 2025, with expectations for further reduction.

Concerns

  • One rig, Jindal Explorer, was dehired in May 2025 for refurbishment and will be redeployed in October 2025.

  • Jindal Pioneer is expected to be dehired in September 2025 for refurbishment, meaning no income from this rig in Q3 and Q4 FY26.

  • ONGC tenders have been sluggish, with some delayed or canceled, impacting new rig deployment opportunities.

  • Aramco contracts are considered 'quite uncertain' and 'very volatile' by management, leading to a preference for stability with ONGC.

Key financials

  1. Operational Revenue ₹254 Cr +3.7%QoQ
  2. EBITDA ₹107 Cr +23%QoQ
  3. PAT ₹55 Cr +3.8%QoQ
  4. EPS ₹19 +5.6%QoQ
  5. Finance Cost ₹2.5 Cr

What they filed

Q1 FY27: revenue up 8.3%, net profit down 7.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue172 239 245 254 238 +38%242 +1%263 +7%275 +8%
EBITDA31 81 87 107 93 +200%72 −11%78 −10%104 −3%
Net profit16 49 53 56 121 +656%-37 −176%32 −40%52 −7%
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 Gross ₹121 Cr · Net cash ₹112 Cr
    As on 30th June, the net cash position is INR112 crores. The way we arrived at that figure is by deducting INR121 crores from the total liquidity of INR233 crores. The debt is INR121 crores and total liquidity available to us is INR233 crores.
  • Liquidity Cash ₹233 Cr Cash is invested in liquid mutual funds. Operational surpluses are retained for refurbishment expenditure.
    Cash is invested in liquid mutual funds. We will not invest operational surpluses in equity mutual funds. We want to retain the operational surplus because we have to incur refurbishment expenditure as and when rigs will get dehired.

Guidance & targets

Revenue

  • Revenue Revenue · FY26 · High confidence in excess of INR925 crores
    In FY '26, we estimate that revenue will be in excess of INR925 crores

    — Kaushal Bengani

  • Revenue Revenue · FY27 · Medium confidence almost INR900 crores
    our revenue will be almost INR900 crores in FY '27

    — Kaushal Bengani

EBITDA

  • EBITDA EBITDA · FY26 · High confidence between INR360 crores to INR380 crores
    and EBITDA will be between INR360 crores to INR380 crores.

    — Kaushal Bengani

  • EBITDA EBITDA · FY27 · Medium confidence in the range of INR360 crores to INR380 crores
    and EBITDA will again be in the range of INR360 crores to INR380 crores for financial year FY '27.

    — Kaushal Bengani

Depreciation

  • Quarterly Depreciation Depreciation · rest of this financial year · High confidence INR38 crores
    INR38 crores is a fair figure for the rest of this financial year.

    — Kaushal Bengani

Rig Rates

  • International Rig Rate Rig Rates · currently · High confidence USD 80,000 and USD 90,000
    The international rig rate currently is upwards of, between USD 80,000 and USD 90,000.

    — Raghav Jindal

Tenders

  • ONGC Tender Release Tenders · September · High confidence by September
    We know that they have another tender coming out by September.

    — Raghav Jindal

What to watch in Q2 FY26

Jindal Explorer redeployment

October 2025
Current Under refurbishment
Target Redeployed

Why it matters

Ensures full utilization of a key asset and contributes to future revenue generation.

Further, one of our rigs, Jindal Explorer, was dehired in May 2025 and is currently under refurbishment. It will be redeployed in October 2025.

Risks & concerns

  • Sluggish ONGC tenders and potential delays/cancellations

    medium

    ONGC tenders have been a little sluggish, with some delayed or canceled, impacting new contract opportunities.

    Management acknowledged

  • Volatility and uncertainty of Aramco contracts

    medium

    Aramco contracts are considered uncertain and volatile, with a history of dehiring rigs and potential for rate changes, leading management to prefer stability with ONGC.

    Management acknowledged

  • Jindal Pioneer dehiring and refurbishment impacting income

    medium

    Jindal Pioneer is expected to be dehired in September 2025 for refurbishment, resulting in no income from this rig in Q3 and Q4 FY26, though this is factored into conservative projections.

    Management acknowledged

  • Competitive bidding leading to low rig rates

    low

    A past ONGC tender saw a competitor bid very low due to idle rigs, but management believes competitors have learned their lesson and expects better rates.

    Analyst downplayed

Q&A highlights

6 direct
Market value vs Book value of rigs Partial
Market value is generally higher for old rigs because of depreciation. And the fact that these rigs are participating in the same tenders in which new rigs are also participating. But if you're looking for a figure, we cannot provide that to you right now because we have not undertaken a valuation exercise.

Highlights the potential undervaluation of assets on the balance sheet and the company's current inability to provide a market valuation.

Asked by Apoorv Bandi

Next acquisition plans and growth strategy Direct
We are actually based on the ONGC tenders. ONGC tenders have been a little sluggish. If there are new tenders coming up, we will be looking at further rigs, other than the ones which we have in our fleet.

Clarifies that the company's growth strategy is primarily tied to ONGC tenders and further rig acquisitions, indicating a focused approach.

Asked by Apoorv Bandi

International rig hiring rates and ONGC contract rates Direct
The international rig rate currently is upwards of, between USD 80,000 and USD 90,000. Yes, the statement that the last tender went for a very low price was a one-off, and we expect the rates to become better again, holds true because it was due to competition that one of our competitors bid a very low rate because they had 3 rigs idle and they wanted to desperately get one into action.

Provides insight into current market pricing for rigs and management's expectation for future ONGC contract rates, which are crucial for profitability.

Asked by Faisal Hawa

Consolidation of rigs from sister concerns onto the balance sheet Partial
Consolidation, nothing as such in mind, but eventually, we would prefer to have all the rigs in one balance sheet with no time lines for that.

Indicates a long-term strategic preference for consolidating assets, which could simplify the company structure, but lacks immediate action or timeline.

Asked by Faisal Hawa

Profitability estimates for coming year (FY26 & FY27) Direct
In FY '26, we estimate that revenue will be in excess of INR925 crores and EBITDA will be between INR360 crores to INR380 crores. Going forward, in FY '27, even though there are a couple of rigs getting dehired in FY '27, our revenue will be almost INR900 crores in FY '27 and EBITDA will again be in the range of INR360 crores to INR380 crores for financial year FY '27.

Provides concrete financial guidance for the next two fiscal years, which is essential for investor modeling and future expectations.

Asked by Faisal Hawa

Liquidity management and investment of surplus funds Direct
We will not invest operational surpluses in equity mutual funds. We want to retain the operational surplus because we have to incur refurbishment expenditure as and when rigs will get dehired.

Clarifies the company's capital allocation policy, prioritizing operational needs like refurbishment over financial investments with surplus funds.

Asked by Faisal Hawa

Backup plan for Jindal Pioneer if ONGC tender doesn't go through Direct
We are already speaking to some international companies as well as in India. So yes, we do have a backup plan.

Addresses a potential risk to the utilization of a key asset, providing reassurance about contingency planning for Jindal Pioneer.

Asked by Adarsh Hinduja

Reasons for not working with Aramco Direct
Aramco is quite uncertain. Like you must have heard that they dehired about 20 rigs in the previous years. So the tender is very volatile as they can cancel or amend the rates at any time. And it's usually not a very long-term period contract, though the rates are higher. So we prefer stability.

Explains the strategic decision to prioritize long-term stability with ONGC over potentially higher but more volatile rates and contract terms from Aramco.

Asked by Adarsh Hinduja

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance Overview

Jindal Drilling reported a strong operational performance in Q1 FY26, with EBITDA increasing by 23% QoQ to INR107 crores from INR87 crores in Q4 FY25. Net profit also saw a 5% QoQ rise, reaching INR55 crores from INR53 crores, and EPS improved from INR18 to INR19 per share. This growth was primarily driven by the recent acquisition and full quarter operations of the Jindal Pioneer rig. While operational revenue increased from INR245 crores to INR254 crores, total revenue remained similar to the previous quarter due to a decline in other income from forex fluctuations.

Rig Operations and Refurbishment Schedule

The company's rig fleet management includes ongoing refurbishment activities. One rig, Jindal Explorer, was dehired in May 2025 and is currently undergoing refurbishment, with redeployment anticipated in October 2025. Additionally, the Jindal Pioneer rig, a significant profit contributor, is expected to be dehired in September 2025 for its own refurbishment. This means no income from Jindal Pioneer is projected for Q3 and Q4 FY26, a factor already incorporated into the company's financial outlook.

Financial Outlook and Conservative Projections

Jindal Drilling provided a conservative financial outlook for the coming years. For FY26, revenue is projected to exceed INR925 crores, with EBITDA estimated between INR360 crores and INR380 crores, a significant increase from FY25's INR237 crores. Looking to FY27, revenue is expected to be around INR900 crores, with EBITDA remaining in the INR360-380 crores range, even with some rigs being dehired. These projections are based on a conservative assumption of Jindal Pioneer being deployed at USD 40,000 per day, though management expects higher rates.

Capital Allocation and Debt Management

The company maintains a robust financial position, reporting a net cash balance of INR112 crores as of June 30, 2025. Total liquidity stands at INR233 crores, against a debt of INR121 crores. Finance costs have shown a consistent decline, reaching INR2.5 crores in June 2025, with further reductions expected as gross debt is repaid. Operational surpluses are strategically retained for future refurbishment expenditures of rigs, rather than being invested in equity mutual funds, underscoring a focus on core operational needs.

Market Dynamics and ONGC Tender Strategy

Management acknowledged a period of sluggishness in ONGC tenders, with some being delayed or canceled. However, they anticipate new tenders to be released by September 2025 and expect improved rates, viewing a past low-rate contract as an isolated competitive event. The company noted international rig rates are currently in the range of USD 80,000-90,000 per day. Jindal Drilling prioritizes stability, preferring long-term contracts with ONGC over potentially higher but more volatile opportunities from entities like Aramco, which has a history of uncertain contract terms.

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