On Monday, the shares of a pioneer in oil and gas support services specializing in the charter hiring of workover rigs and many more in focus upon receiving a Letter of Award from ONGC worth Rs. 90.7 Cr.
Price Action
With a market capitalization of Rs 3600 Cr, the shares of Deep Industries Ltd closed at Rs. 562.50 down 4.69 percent from its previous day’s close price of Rs. 590.15.
Deep Industries Ltd. had an astounding bull run for 4 consecutive trading days. Overall, the stock rose to about 14%, reaching a record high of ₹599 on 3rd January 2025.
What Happened
In a major update, this Oil Drilling service provider has received a Letter of Award from Oil and Natural Gas Corporation Ltd (ONGC) for the charter hiring of a 100MT Workover Rig.
This contract is set to last for a period of seven years for ONGC’s Assam Asset, with an estimated total value of Rs. 90.70 crores. This long-term deal with one of India’s largest state-owned oil and gas companies positions Deep Industries for substantial growth and financial stability.
Although the news initially created excitement, the stock of Deep Industries experienced some volatility following the announcement, with a drop of 5% in the next trading session. This could be attributed to profit-booking, as investors who anticipated the news likely sold off their shares after a brief surge.
About the Company
Deep Industries Ltd. is a one-stop solutions provider for Oil & Gas field operations & services. The company has established a strong presence in the market with its expertise in field maintenance and well-servicing operations. Furthermore, Deep Industries covers over 70 percent of the post exploration value chain with domain expertise, skilled manpower and global presence.
This company majorly caters to a long-standing loyal customer base which includes ONGC, OIL, GAIL, ESSAR, GSPL and Reliance Infrastructure.
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Financials
Its revenue from operations grew by 29 percent from Rs. 101 Cr to Rs. 131 Cr during Q2FY24-25, accompanied by profits of Rs. 30 Crores to Rs. 42 Cr.
In terms of financial performance, the revenue growth has been consistent, driven by long-term contracts with major clients. The company has ensured a healthy balance sheet by maintaining a debt-to-equity ratio of 0.2. With an operating margin of around 25-30% and a strong EBITDA margin,
Recent Orders
As of Q2FY25, the total order book value of the company stood at a value of ₹2,622 cr. The company’s major order wins during this period include an order worth ₹ 1,402 crore for 15 years duration from ONGC for Production Enhancement. This contract boosted production from ONGC’s mature oil fields in Rajahmundry.
The other contract was also from ONGC which was worth ₹ 63 crore over a period of three years for hiring of services for a skid mounted modular type gas separation system and gas compression units at Rokhia GCS Tripura Asset.
Conclusion
While short-term volatility is common, the long-term outlook for Deep Industries remains positive as it continues to grow in the energy industry. For those looking to invest in a company with a solid footing in the oil and gas sector, Deep Industries is certainly one to watch closely.
Written by Shwetha Sairam
Disclaimer
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