Jindal Drilling

Jindal Drilling reported a robust Q2 FY26, with total revenue increasing by 32% quarter-on-quarter. Net Profit After Tax (PAT) saw a significant jump of 116% QoQ to INR 121 crores, translating to an EPS of INR 42. This sharp increase in profitability was primarily driven by a favorable outcome of a 15-year-old litigation, which resulted in INR 100 crores being booked as other income.

Despite the strong top-line and PAT growth, EBITDA for Q2 FY26 decreased by 13% QoQ, from INR 107 crores to INR 93 crores. Operating margins also saw a decline, moving from approximately 42% in Q1 FY26 to 39% in Q2 FY26. Management attributed this dip to the dehire of two rigs, Jindal Explorer and Jindal Pioneer, for refurbishment, as well as the impact of foreign exchange fluctuations.

Jindal Explorer is in the final stages of refurbishment and is expected to be redeployed with ONGC within 7-10 days, bringing the total operating rigs to five by the end of November 2025. Jindal Pioneer has also commenced its refurbishment, anticipated to conclude by Q4 FY26. The company plans to bid for an upcoming ONGC tender for four rigs in the first week of December, aiming for day rates in the mid-$60s, a significant improvement over the $35,606 rate secured for Jindal Explorer due to past competitive pressures.

The company's net cash position significantly improved to INR 295 crores in September 2025, up from INR 111 crores in March 2025. Management emphasized a strategy of conserving cash to fund future rig refurbishments, which typically cost INR 70-120 crores per rig, and to avoid external borrowing. They also noted doubling the dividend payout in the most recent financial year.

Beyond rig refurbishment, Jindal Drilling is actively exploring new growth avenues. The company recently won a tender in directional drilling, which will involve deploying new capital. Management indicated ongoing evaluation of other sectors and areas within the drilling segment, though no concrete announcements were made regarding further acquisitions or new business lines.

Management acknowledged that ONGC continues to issue fewer tenders than anticipated, creating a competitive domestic market. While the industry's current day rates are in the $70,000-$90,000 range, past competitive bidding forced Jindal Drilling to accept lower rates. The company is also evaluating opportunities with other operators and international players, where prices might be better but operating expenses are higher.