Jindal Drilling And Industries Limited — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Jindal Drilling's Q3 FY26 operational performance was in line with expectations, but the bottom line was significantly impacted by the reversal of an approximately INR 100 crores income related to an ONGC litigation, which became sub-judice. The company remains debt-free and cash-rich, guiding for INR 350 crores EBITDA for FY26 and FY27, but is conserving cash for upcoming rig refurbishments and a $35 million vendor payment. Management is actively pursuing new ONGC tenders and aims to secure contracts for dehiring rigs, while acknowledging past competition in rig rates.

Highlights

  • Operational performance in Q3 FY26 was broadly in line with earlier communications.

  • The company is debt-free and cash-rich, with all rigs deployed except one.

  • Management expects an EBITDA of approximately INR 350 crores for both the current year (FY26) and next year (FY27).

  • The dividend paid in the previous financial year was doubled compared to the year before.

  • ONGC is expected to release another tender for 4 rigs soon, and the company is actively bidding on current tenders.

Concerns

  • A gain of approximately INR 100 crores from an old ONGC litigation, previously booked, was reversed in Q3 FY26 due to the matter becoming sub-judice in the Supreme Court, negatively impacting Other Income and the bottom line.

  • The timeline for the Supreme Court verdict on the ONGC litigation is uncertain, and management was evasive on providing details.

  • Significant cash conservation is required for upcoming rig refurbishments (INR 50-100 crores per rig for 3 rigs in CY26) and an approximate $35 million payment due to the vendor for Jindal Pioneer.

  • Rig rates in India were affected by competition in the last tender, though management expects higher levels in future tenders.

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
  • Capex Capex disclosed conserving cash for the refurbishment exercise
    • Refurbishment of rigs ₹50 Cr
    • Refurbishment of rigs (upper estimate) ₹100 Cr
    We are cash rich, but you should also bear in mind that in calendar year 2026, 3 of the rigs are getting dehired. Therefore, they will go into refurbishment. So, we are conserving cash for the refurbishment exercise. The expenditure for refurbishment is not booked when it is incurred, but it is amortized over the duration of the contract. Normally, depending on the condition of the rig, the expenditure can be between INR50 crores to INR100 crores. Per rig.
  • Debt Debt disclosed
    We are a strong company. We are debt free.
  • Liquidity Liquidity disclosed Company is cash rich and conserving cash for rig refurbishments and a $35 million payment to the vendor for Jindal Pioneer.
    We are cash rich, but you should also bear in mind that in calendar year 2026, 3 of the rigs are getting dehired. Therefore, they will go into refurbishment. So, we are conserving cash for the refurbishment exercise. In addition to that, there is also dues to the vendor from whom we have acquired Jindal Pioneer. Therefore, cash is meant for operational purposes, and we want to conserve it. $35 million approximately.

Guidance & targets

Profitability

  • EBITDA Profitability · FY26 · High confidence INR 350 crores
    We will be doing INR350 crores of EBITDA in the current year, slightly more than that.

    — Kaushal Bengani

  • EBITDA Profitability · FY27 · High confidence INR 350 crores
    And next year also, I think we will do around INR350 crores of EBITDA.

    — Kaushal Bengani

Operations

  • ONGC Tenders Operations · soon · Medium confidence another tender for 4 rigs
    ONGC should be taking out a couple of tenders. We are concluding one today, and they are expected to come out with another tender very soon for 4 rigs.

    — Raghav Jindal

  • Rig Refurbishment Duration Operations · after dehiring · High confidence 3 to 4 months
    After a rig gets dehired, it takes about 3 to 4 months for refurbishment as well.

    — Raghav Jindal

What to watch in Q4 FY26

Resolution of ONGC litigation

next quarter / ongoing
Current Sub-judice in Supreme Court, ~INR 100 crores income reversed
Target Favorable verdict, re-booking of income

Why it matters

The outcome will significantly impact the company's profitability and financial reporting.

Due to this development, our auditors and Board were of the view that till this matter is concluded in finality, we should reverse the income, which has already been booked in the earlier quarter. And therefore, the Other Income line item is negative in the third quarter.

Risks & concerns

  • Uncertainty of ONGC litigation outcome

    high

    Income of ~INR 100 crores reversed due to matter becoming sub-judice in Supreme Court, with no clear timeline for resolution.

    Management acknowledged

  • Volatility in rig rates and market competition

    medium

    Rig rates in India were affected by competition in the last tender, and rates can shoot up or crash very quickly.

    Management acknowledged

  • Significant cash outflow for rig refurbishments and vendor payment

    medium

    Conserving cash for 3 rig refurbishments (INR 50-100 crores per rig) and a $35 million payment for Jindal Pioneer.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Reversal of ONGC litigation income and its impact on Q3 FY26 financials Direct
favourable award of the Bombay High Court was appealed in the Supreme Court and the matter has again become sub-judice. Due to this development, our auditors and Board were of the view that till this matter is concluded in finality, we should reverse the income, which has already been booked in the earlier quarter. And therefore, the Other Income line item is negative in the third quarter.

This explains the significant negative impact on the company's bottom line in Q3 FY26, despite operational performance being in line.

Expected dry dock expense for rigs ending contracts in FY27 Direct
Normally, depending on the condition of the rig, the expenditure can be between INR50 crores to INR100 crores. Per rig.

Provides specific capex guidance for upcoming rig maintenance, which will require significant cash outflow.

Asked by Siddharth Chauhan

Rig rates, global landscape, and competition in Indian tenders Direct
Rig rates really got a hit when Saudi Aramco had terminated a few contracts. Now it has resumed those contracts back and most of them are back into drilling in Saudi Aramco, which is a very, very positive global trend... The rates in India were affected due to competition in the last tender. Hopefully, in the coming tenders, we should be aiming at a higher level because obviously, those rates were something which were not feasible.

Offers insight into the competitive environment for rig rates in India and management's strategy to aim for higher rates in future tenders.

Asked by Saket Kapoor

ONGC tender requirements and international competition Direct
Indian competition would not increase with international rigs because there are not too many rigs with the same specification which ONGC requires. And for them to change it to an ONGC requirement would be a very high cost, and that cost would be not equivalent to the rates that you get in India.

Clarifies why the company believes it faces limited international competition for ONGC tenders, which is a key advantage.

Asked by Pawan Nahar

Plans for adding more rigs and potential arrangements with Maharashtra Seamless Partial
There is no update on that, and we have not received any communication from Maharashtra Seamless.

Indicates no immediate progress on expanding the rig fleet through potential acquisitions or arrangements with group companies, despite earlier discussions.

Asked by Saket Kapoor

Rationale for conserving cash and dividend policy given cash-rich status Direct
We are cash rich, but you should also bear in mind that in calendar year 2026, 3 of the rigs are getting dehired. Therefore, they will go into refurbishment. So, we are conserving cash for the refurbishment exercise. In addition to that, there is also dues to the vendor from whom we have acquired Jindal Pioneer.

Explains the company's capital allocation strategy, prioritizing operational needs (refurbishment, vendor payments) over immediate higher shareholder returns despite being cash-rich.

Asked by Amit Agicha

Status and contribution of Jindal Pioneer rig Direct
That rig was acquired in March 2025, and it was on a contract at that point in time, and it continued to generate revenue till about October of 2025. Thereafter, it went into refurbishment. Once the rig goes into refurbishment, at that point in time, it stops earning revenue. But the refurbishment exercise is for the subsequent contract, which we are expecting to get in about the next few months.

Provides clarity on the operational status of a key asset, its revenue generation timeline, and future expectations post-refurbishment.

Asked by Pawan Nahar

Timeline for Supreme Court verdict on ONGC litigation Evasive
In India, there is no timeline on legal cases. I will leave it at that.

Highlights the uncertainty surrounding the resolution of the litigation that significantly impacted Q3 financials, leaving investors without a clear timeframe.

Asked by Mehul Panjuani

3 min read 6 chapters

Detailed narrative

Impact of ONGC Litigation Reversal on Q3 FY26

Jindal Drilling's Q3 FY26 financial performance was significantly affected by the reversal of an approximately INR 100 crores income. This income, related to an old litigation with ONGC, was previously booked after a favorable Bombay High Court award. However, the matter has since been appealed to the Supreme Court and is now sub-judice. Consequently, the company's auditors and Board decided to reverse the income, leading to a negative 'Other Income' line item in Q3 FY26 and impacting the bottom line, despite operational performance remaining broadly in line with expectations.

Operational Performance and Future Outlook

The company reported that its operational performance for Q3 FY26 was consistent with prior communications. Management reiterated its expectation to achieve an EBITDA of approximately INR 350 crores for both the current fiscal year (FY26) and the next (FY27). All rigs are currently deployed except one, and the company is actively working to secure new contracts for rigs that will be dehired, including Jindal Pioneer which is currently undergoing refurbishment.

Rig Deployment and Tenders

ONGC is expected to release another tender for 4 rigs soon, and Jindal Drilling is actively participating in current tenders, including one for Jindal Pioneer. Management noted a past shortfall of rigs and anticipates aiming for higher rig rates in upcoming tenders, as previous rates were deemed unfeasible. The company believes it faces limited international competition for ONGC tenders due to the specific technical requirements for rigs in the Indian market, which would be costly for international players to meet.

Capital Allocation and Cash Conservation

Jindal Drilling maintains a debt-free and cash-rich balance sheet. However, the company is conserving cash for significant upcoming expenditures. These include refurbishment costs for 3 rigs scheduled for dehiring in calendar year 2026, with each refurbishment estimated to cost between INR 50 crores to INR 100 crores. Additionally, an approximate $35 million payment is due to the vendor from whom Jindal Pioneer was acquired. Despite being cash-rich, the company is prioritizing these operational needs over immediate buybacks, though it did double its dividend in the previous financial year.

Rig Refurbishment and Maintenance

The Jindal Pioneer rig, acquired in March 2025, generated revenue until October 2025 before entering refurbishment. This refurbishment process typically takes 3 to 4 months after a rig is dehired and is undertaken to prepare the rig for subsequent contracts. The expenditure for refurbishment is amortized over the duration of the new contract rather than being booked upfront. Management emphasized that all considerations, including refurbishment timelines, are factored into their bidding strategy for new contracts.

Strategic Focus and Market Dynamics

Management indicated a focus on securing longer-term contracts (3 to 5 years) within India, although they are also exploring international opportunities. They are not currently pursuing new services businesses like boats or other offshore activities, instead concentrating on re-contracting the existing rig fleet. The company acknowledged the volatility of rig rates, which can fluctuate rapidly, but expressed optimism for gradual rate increases in the Indian market given the specific demand and limited competition for ONGC's requirements.

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