September 9, 2024
New Delhi, India
Deep Industries – ONGC
Deep Industries’ shares surged nearly 15% after the company announced a major contract win worth ₹1,402 crore from the Oil and Natural Gas Corporation (ONGC) for production enhancement operations at its Rajahmundry asset. The order, which is the largest ever secured by the company, will span 15 years and has doubled Deep Industries’ order book, sending its stock soaring to ₹473 per share, up nearly 18%.
Details of the ONGC Contract:
- Production Enhancement Focus: The contract covers production enhancement operations in the mature fields of ONGC’s Rajahmundry Asset. The Production Enhancement Contracts (PEC) aim to increase the production of hydrocarbons from aging and depleted fields, extending their life by approximately 15 years beyond their original projections.
- Order Book Impact: Deep Industries reported that the new contract significantly boosts its order book, which stood at ₹1,246 crore as of June 30, 2024. The contract win marks a substantial increase in the company’s future revenue potential.
- Leadership Commentary: Paras Savla, Managing Director of Deep Industries, emphasized that the project will help the company expand its expertise in production enhancement contracts, which are expected to boost both revenue and profitability.
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Recent Performance and Financial Highlights:
- Previous ONGC Order: In August, Deep Industries had secured another order worth ₹63 crore from ONGC for hiring services related to a skid-mounted modular gas separation system and gas compression units at the Rokhia GCS Tripura Asset.
- Q1FY25 Financial Results:
- Net Profit Growth: The company reported a 24.9% year-on-year (YoY) rise in net profit to ₹38.74 crore.
- Revenue Increase: Consolidated income for Q1FY25 rose by 21.9% to ₹123.45 crore.
- EBITDA Growth: Earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 26.4% YoY to ₹61.43 crore.
- Margin Performance: The EBITDA margin slightly decreased to 45.7% from 46.4%, while the net profit margin declined to 28.8% from 29% in the same period last year.
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Stock Performance:
- Year-to-Date Gain: Deep Industries’ shares have risen by nearly 78% since the beginning of the year, reflecting strong investor confidence in the company’s growth prospects.
- Annual Performance: The stock has gained over 73% in the past year, outperforming many peers in the oil and gas services sector.
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