Deep Industries Q4 FY27 Result: PAT up 44%, On-track FY27 guidance
PAT CAGR of 58% for FY26-28. Revenue growth of 25-30%. Order-book provides visibility till FY28. After a solid Q1 FY27 trading at attractive forward valuations.
1. Oil & Gas Support Services
deepindustries.com | NSE: DEEPINDS
2. FY22-26: PAT CAGR of 28% & Revenue CAGR of 31%
3. FY26: EBITDA up 61% & Revenue up 55% YoY
4. Q1 FY27: PAT up 44% & Revenue up 40% YoY
EBITDA up 23% & Revenue up 12% QoQ
5. Business Metrics: Strong & Improving Return Ratios
FY25 - excluding the ₹251 crore exceptional loss
6. Outlook: Revenue FY27 PAT growth of 70%
Strong growth visibility supported by order book
6.1 Management Guidance – FY27
the company could even get double in next 3 to 5 years
FY27
Standalone revenue growth of 18-20%
Consolidated revenue growth to exceed 25%.
PAT of over ₹350 Cr.
FY28 — PAT of ~₹500 Cr
PAT CAGR of 58% for FY26-28
Consolidated EBITDA Margin: Holding within 43-45% range.
Expect margins to improve in FY28 and subsequent years because of higher-margin contributions coming from both PEC and offshore services
Cash Flow Conversion: Maintain historical 75-80% EBITDA to cash conversion
Vertical & Segment Outlook
Production Enhancement Contract (PEC):
Mori Field Recovery: Production currently running — following a 5-6 month delay in incremental production due to an operational mishap at the Mori-5 well
Deploying rigs to restore full operations
Incremental production expected to start contributing by September/October 2026
Plans to execute a capital expenditure of ~₹150 Cr on this field contract by March 2027
In FY28, this single block to deliver revenue exceeding ₹150 Cr
Plans to bid for new mature field blocks recently floated by ONGC.
Offshore Support Services (Dolphin Offshore):
Dolphin’s core contract for the DP2 accommodation barge Prabha is guided to continue delivering ₹150 Crore in revenue.
Fleet Expansion Strategy: Future capex for fleet additions is committed only after securing firm deployment orders.
Plans to add more tugs, barges, and support vessels one by one over the next three to five years.
Kandla Energy and Chemicals (Backward Integration):
Revival of Kandla requires a capex of ₹10-15 Cr (funded entirely without debt).
To start contributing later in FY27,
Will expand consol operating EBITDA margins by 1-1.5% by producing critical drilling chemicals in-house
No further write-offs related to Kandla in FY27
High-Capacity Drilling Rigs:
To bid for higher capacity onshore rigs (2,000 HP and 3,000 HP) within FY27
Capital Expenditure & Balance Sheet Health
Total Capex: ~₹250-300 Cr (dependent on contract wins)
Funding and Capital Raising:
Rigs and capex to be funded through internal accruals and debt
Net debt-free — no equity raising or QIP is planned.
Order Book & Pipeline Visibility
Order book — ₹3,047 Cr as of Q1FY27 end
Execution guidance = ~₹800 Cr of contracts during the remainder of FY27
60%+ of order book scheduled for execution over the next 2-2.5 years
Active bidding pipeline ~₹700-₹800 Cr
6.2 Q1FY27 Performance vs Full-Year FY27 Guidance
Revenue — Q1 growth of 40% ahead of guidance of 25%+ growth
PAT: Q1 PAT of ₹89 Cr in line with full year PAT target of ~₹350 Cr
EBITDA Margin — 43.6% in Q1 within the guided range of 43-45%
Active Bidding Pipeline — ₹700-800 Cr at Q1-27 end vs ₹500-600 Cr at Q4-26 end
7. Valuation Analysis — Deep Industries Ltd
7.1 Valuation Snapshot
CMP: ₹637 | Market Cap: ₹4,076.80 Cr
Attractive Forward Valuations
Current valuations are not demanding — provide flexibility to sustain a quarter or two where performance is not as per guidance
DEEPINDS generated ₹83.16 Cr of free cashflow. It is trading at free cashflow yield of 2.04
FY27 expected cashflow from operations =75% X FY27 EBITDA = ₹412 Cr
Capex= ₹250 Cr
Free cashflow = 412-250 = ₹162 Cr
DEEPINDS is trading at FY27 free cashflow yield of 4% — making the valuations look reasonable.
Multiple Contraction on Guidance: Targets of ~₹350 Cr PAT in FY27 and ~₹500 Cr PAT in FY28 (high-margin ONGC mature field contract and offshore accommodation barge scaling) drive multiple contraction
FY28 DEEPINDS is trading at an forward P/E(×) of 8.9 and EV/EBITDA(×) of 5.8, — attractive valuations for business delivering 2.5 × PAT for FY25-27.
Attractively valued on FY27E and FY28E, provided execution sustains with the guided range with stable margins. Multiples leave room for re-rating if FY27 is delivered.
7.2 Opportunity at Current Valuation
Strong Guidance: ~₹500 Cr PAT in FY28 is not discounted in the valuations
Revenue Visibility: FY27 and FY28 projections supported by an order book of ~₹3,000 Cr order book
Possibility of re-rating: If FY27 and FY28 guidance is delivered
Longer term story — Doubling in 3-5 years
7.3 Risk at Current Valuation
Fully Valued at Current valuation — At 20 P/E(×), DEEPINDS is fully valued with limited opportunities in the short-term
Opportunities are dependent on delivering FY27 and FY28 guidance
If guidance is not delivered at near all time high price — the downside would be deep and immediate
Previous coverage of DEEPINDS
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