Jindal Drilling And Industries Limited — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

Jindal Drilling reported strong Q4 and FY25 results, driven by rig acquisitions and improved operations. The company achieved significant debt reduction and a net cash position. While a recent contract for Jindal Explorer saw lower rates due to competitive bidding, management is optimistic about future tenders, expecting higher rates and record revenue and profits in FY26, alongside strategic diversification efforts.

Highlights

  • Q4 FY25 Revenue improved by 4% QoQ to INR264 crores, and EBITDA increased by 7% QoQ to INR87 crores.

  • FY25 saw robust growth with Revenue up 37% YoY to INR884 crores and PAT up 24% YoY to INR141 crores.

  • The acquisition of Rig Jindal Pioneer was concluded in Q4 FY25, expanding the company's owned fleet to 3 offshore jack-up rigs.

  • Gross debt significantly reduced from INR282 crores in March '24 to INR139 crores in March '25, resulting in a net cash position of INR131 crores.

  • Management expects record revenue and profits in FY26 and anticipates higher day rates for future rig contracts, targeting $60,000 or higher.

Concerns

  • The new contract rate for Jindal Explorer at INR35,000 was significantly lower than previous cycles, attributed to desperate competitor bidding.

  • Uncertainty in international markets, such as Saudi Aramco laying off rigs, can lead to flexible rates and contract termination risks, though its impact on the Indian market is considered limited.

  • The business is inherently cyclical, with fluctuations in the oil and gas cycle impacting operations.

Key financials

  1. Revenue (QoQ) ₹264 Cr +4%QoQ
  2. EBITDA (QoQ) ₹87 Cr +7.4%QoQ
  3. PAT (QoQ) ₹53 Cr +8.2%QoQ
  4. EPS (QoQ) ₹18 +5.9%QoQ
  5. Revenue (YoY) ₹884 Cr +37%YoY
  6. EBITDA (YoY) ₹237 Cr +19%YoY
  7. PAT (YoY) ₹141 Cr +24%YoY
  8. EPS (YoY) ₹49 +25.6%YoY

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 ₹139 Cr
    Our gross debt has fallen from INR282 crores in March '24 to INR139 crores in March '25, and net cash position has improved from INR51 crores in March '24 to INR131 crores in March '25.
  • M&A Jindal Pioneer Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Expanded the company's owned fleet to 3 offshore jack-up rigs and is expected to improve overall profitability.

    Revenue and EBITDA improved due to this acquisition and full quarter operations of Jindal Supreme. Overall profitability of Jindal Drilling will increase because now the revenue of Jindal Pioneer will accrue entirely to Jindal Drilling.

    The key development in quarter 4 FY '25 was acquisition of Rig Jindal Pioneer on 5th March 2025. ... Since we have acquired it, this will decline, but the overall profitability of Jindal Drilling will increase because now the revenue of Jindal Pioneer will accrue entirely to Jindal Drilling.
  • Liquidity Cash ₹131 Cr Net cash position improved from INR51 crores in March '24 to INR131 crores in March '25. This cash will be used to discharge the purchase consideration of Jindal Pioneer and for future refurbishment costs.
    Our gross debt has fallen from INR282 crores in March '24 to INR139 crores in March '25, and net cash position has improved from INR51 crores in March '24 to INR131 crores in March '25. ... We have purchased Jindal Pioneer on the 5th of March, and we have to make the payment to the seller. ... And then once rigs get dehired, then there is a certain amount of refurbishment cost, which gets incurred for which we require cash flow.

Guidance & targets

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence higher than INR898 crores

    From INR828 crores (FY25) today

    In FY '26, we have given a figure of INR898 crores. Most likely, the revenue will be higher than this because we have given a conservative figure over here. The revenue in FY '25 was INR828 crores. So even after giving a conservative figure, the revenue shows an increase of INR70 crores. In reality, I think we will cross that figure and positively surprise shareholders.

    — Kaushal Bengani

  • FY27-FY29 Revenue Revenue · FY27, FY28, FY29 · Medium confidence in line with FY25 or FY26
    And consequently, we expect subject to getting good rates, the revenue for FY '27, '28, '29 to be in line with whatever we have done in FY '25 or FY '26.

    — Kaushal Bengani

Profitability

  • FY26 Record Revenue and Profits Profitability · FY26 · High confidence record revenue and profits
    We have done really well over the past 2 years, and we will see record revenue and profits in FY '26.

    — Kaushal Bengani

Margin

  • Blended Margin Margin · entire year · High confidence around 35%
    For the margin, you can take a blended margin of around 35% for the entire year.

    — Kaushal Bengani

Rig Rates

  • Future Tender Rates Rig Rates · coming tenders (late '25, early '26) · Medium confidence $60,000 or higher

    From $35,000 (Jindal Explorer) today

    So definitely, that's not the new range. We will be -- still be targeting the 60s or higher in the coming tenders.

    — Raghav Jindal

  • Future Contract Day Rates Rig Rates · future contracts · High confidence much higher than $35,000

    From $35,000 today

    We don't expect rates of 35,000 going forward. It is a one-off due to some special situations which was in place. That situation will not continue going forward. Therefore, new contracts will be at a higher rate.

    — Kaushal Bengani

Debt

  • Debt Reduction Debt · ongoing · High confidence continue to reduce aggressively
    Debt will continue to reduce aggressively. And we are net cash right now. So the debt is only at a gross level.

    — Kaushal Bengani

Tax Rate

  • Effective Tax Rate Tax Rate · current · High confidence lower than 25%
    It will be lower than 25% because we've acquired the rig. And I'm talking about the current tax rate only. It is likely to be -- it will be lower than 25% because we have acquired the rig and we get accelerated depreciation.

    — Kaushal Bengani

JV Loan Repayment

  • Full Repayment of Shareholder Loans to JV JV Loan Repayment · this year · High confidence full repayment
    If you look at the loan to joint ventures, it has come down from last year. And I think in this year, full repayment is expected.

    — Kaushal Bengani

ONGC Demand

  • ONGC Demand Increase ONGC Demand · by the next coming year · Medium confidence increase substantially
    Once that's done by the next the coming year, their demand would increase substantially. So, we would be looking at higher contracts within ONGC as well.

    — Raghav Jindal

Rig Redeployment

  • Jindal Explorer Redeployment Rig Redeployment · November or maybe a little earlier · High confidence redeployed on new contract

    From under refurbishment today

    Correct. So, Jindal Explorer is under refurbishment as we speak. It is expected to be redeployed on the new contract in November or maybe a little earlier.

    — Kaushal Bengani

What to watch in Q1 FY26

Jindal Explorer Redeployment

November or earlier
Current Under refurbishment
Target Redeployed on new contract

Why it matters

Successful redeployment of Jindal Explorer is crucial for revenue generation and operational efficiency.

Correct. So, Jindal Explorer is under refurbishment as we speak. It is expected to be redeployed on the new contract in November or maybe a little earlier.

Risks & concerns

  • Low rig day rates due to competitive bidding

    medium

    Jindal Explorer secured a contract at INR35,000, significantly lower than previous cycles, attributed by management to desperate competitors.

    Analyst downplayed

  • Uncertainty and flexibility in international rig markets

    medium

    International markets like the Middle East (e.g., Saudi Aramco layoffs) have flexible rates and higher contract termination risks, though the impact on the Indian market is limited.

    Management acknowledged

  • Cyclical nature of the oil and gas industry

    medium

    Fluctuations in the oil and gas cycle will continue to impact the business, which is inherent to the sector.

    Management acknowledged

  • Lower ONGC demand leading to fewer tenders

    low

    ONGC's current demand is less, resulting in fewer tenders, but demand is expected to increase substantially by next year.

    Management acknowledged

Q&A highlights

8 direct
Low contract rate for Jindal Explorer Direct
It was quite a low rate. ONGC had canceled the last 2 contracts and the third one also it had not come to any outcome. I believe there were some competitors who had 3 rigs standing and they were very desperate for a contract, and they did not assess the markets very well.

Analyst questioned the significantly lower rate for Jindal Explorer, and management explained it as an anomaly due to desperate competitor bidding, not a new market trend.

Asked by Nirvana Laha

Diversification strategy beyond ONGC Direct
No, we don't want to put all our eggs in one basket. But like how we had an opportunity in Mexico, we did go for that. Similarly, we are looking at opportunities all around the world, and we will go with the best opportunity and whichever is the best option for the company and the rigs.

Analyst raised concern about over-reliance on ONGC, prompting management to clarify their global search for opportunities and willingness to diversify geographically and into related services.

Asked by Nirvana Laha

FY26 Revenue and Profit Outlook Direct
In FY '26, we have given a figure of INR898 crores. Most likely, the revenue will be higher than this because we have given a conservative figure over here. ... We have done really well over the past 2 years, and we will see record revenue and profits in FY '26.

Analyst questioned potential revenue drop in FY26 due to expiring contracts, but management provided strong guidance for higher revenue and record profits, exceeding conservative estimates.

Asked by Darshil Jhaveri

Future rig day rates and market expectations Direct
So definitely, that's not the new range. We will be -- still be targeting the 60s or higher in the coming tenders.

Analyst asked if the low Explorer rate was the new normal, and management firmly stated it was an anomaly, expecting future tender rates to be significantly higher, targeting $60,000 or more.

Asked by Darshil Jhaveri

Debt reduction and utilization of net cash Direct
Debt will continue to reduce aggressively. And we are net cash right now. So the debt is only at a gross level. ... We have purchased Jindal Pioneer on the 5th of March, and we have to make the payment to the seller.

Analyst inquired about the company's debt reduction plans and how the growing net cash position would be utilized, which management clarified would fund the Pioneer acquisition and future refurbishments.

Asked by Manikant

Effective tax rate post-rig acquisition Direct
It will be lower than 25% because we've acquired the rig. And I'm talking about the current tax rate only. It is likely to be -- it will be lower than 25% because we have acquired the rig and we get accelerated depreciation.

Analyst asked about the effective tax rate, and management provided specific guidance that it would be lower than 25% due to accelerated depreciation benefits from the recent rig acquisition.

Asked by Darshil Jhaveri

Impact of global market dynamics (Saudi Aramco) on Indian market Direct
In general, everything does have a little bit of an impact, but none of those rigs are suitable for the Indian market or are coming into the Indian market. ... So, there is a certain aspect that does have an effect, but not majorly.

Analyst questioned if global factors like Saudi Aramco's rig layoffs contributed to lower rates in India, and management clarified that while there's some impact, it's not major due to the specific nature of rigs suitable for the Indian market.

Asked by Pankaj Motwani

Jindal Explorer refurbishment and redeployment timeline Direct
Correct. So, Jindal Explorer is under refurbishment as we speak. It is expected to be redeployed on the new contract in November or maybe a little earlier.

Analyst sought clarity on the status and timeline for Jindal Explorer, which management confirmed is undergoing refurbishment and is expected to be redeployed by November or earlier.

Asked by Sambhav Bajaj

2 min read 6 chapters

Detailed narrative

Q4 FY25 and Full Year Performance Highlights

Jindal Drilling reported a strong Q4 FY25, with revenue increasing by 4% QoQ to INR264 crores and EBITDA growing by 7% QoQ to INR87 crores. PAT also saw an 8% QoQ increase to INR53 crores, with EPS rising from INR17 to INR18 per share. For the full fiscal year 2025, the company achieved a 37% YoY revenue growth to INR884 crores, a 19% increase in EBITDA to INR237 crores, and a 24% rise in PAT to INR141 crores, with EPS reaching INR49 per share.

Strategic Rig Acquisition and Fleet Status

A key development in Q4 FY25 was the acquisition of Rig Jindal Pioneer on March 5, 2025. This acquisition expands the company's owned fleet to 3 offshore jack-up rigs, in addition to operating 2 jack-up rigs with ONGC, with a sixth rig currently under refurbishment. The acquisition is expected to further improve revenue and earnings in Q1 FY26, as the revenue of Jindal Pioneer will now accrue entirely to Jindal Drilling.

Debt Reduction and Capital Allocation

The company demonstrated strong financial discipline, significantly reducing its gross debt from INR282 crores in March 2024 to INR139 crores in March 2025. This led to an improved net cash position of INR131 crores, up from INR51 crores in the previous year. Management confirmed that the purchase consideration for Jindal Pioneer will be discharged through internal accruals, with no new debt required, and the entire payment is expected to be completed within one year.

Outlook on Rig Rates and ONGC Contracts

Despite a recent contract for Jindal Explorer being secured at a lower rate of INR35,000 due to aggressive bidding by competitors, management expressed confidence that this was an anomaly. They anticipate future tender rates to increase drastically in late FY25 and early FY26, targeting $60,000 or higher. ONGC's demand is also expected to increase substantially by the next year, leading to higher contracts for Jindal Drilling as the largest offshore drilling contractor.

Diversification and Future Growth Avenues

Jindal Drilling is actively pursuing diversification beyond its core rig operations and ONGC-centric contracts. The company is exploring opportunities globally, including Mexico and the Middle East, to secure the best options for its rigs. Furthermore, it is expanding into related services such as directional drilling and mud logging, with plans to strategically pursue feasible options in these areas both in India and internationally.

FY26 and Long-Term Financial Guidance

Management projects record revenue and profits for FY26, with revenue expected to exceed the conservative estimate of INR898 crores. A blended margin of around 35% is anticipated for the entire year. For FY27, FY28, and FY29, revenue is expected to be in line with FY25 or FY26, contingent on securing good rates. The effective tax rate is also guided to be lower than 25% due to accelerated depreciation from the rig acquisition.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Oil, Gas & Consumable Fuels earnings calls