Deep Industries Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Deep Industries Ltd (DEEPINDS) Q4 FY22 Earnings Concall

Q&A Highlights:

• Ashwin Agarwal from Akash Ganga Investments asked about the segmental breakup of order book. Paras Savla MD replied that almost 30-33% would be contributing from compression and dehydration business. Around 35-37% from rig services and around 20% from integrated project management and some other projects put together.

• Ashwin Agarwal of Akash Ganga Investments also asked that now being an approved vendor with KOC, what kind of revenue potential does DEEPINDS have. Paras Savla MD answered that as of now the company is evaluating the opportunities and trying to bid for as many rigs as it can. KOC also requires some capex.

• Ashwin Agarwal from Akash Ganga Investments enquired about the outlook on CNG booster compression units in terms of opportunity, competitive landscape and potential for next 2-3 years. Paras Savla MD said there is reasonable amount of demand coming in for all the areas across the country. However, in number terms consolidated data cannot be given.

• Ashwin Agarwal from Akash Ganga Investments asked that overall how does the company look for growth in the next two years. Paras Savla MD said that largely it’s going to be a guesstimate. On a conservative side, DEEPINDS expects that the company should grow around 15% YonY. On the margin front it should be between 38-40%.

• Sudhir Bheda of Right Time Consultancy asked that the company has been able to reduce its debtors significantly and if there is any plans to reduce it going forward. Paras Savla MD said that there are certain project at the initial level. Therefore the first billing cycle takes an abnormal time. So next quarter one might see debtors reduced drastically.

• Sudhir Bheda of Right Time Consultancy asked that when does the company expects Dolphin revenue to kick in approx. if everything goes as per plan. Paras Savla MD replied that it’s going to take 8-9 months for the NCLT orders to come in. To expect revenue in FY23 is impossible, but some revenue from middle of FY24.

• Jaikant Kasturi with Way2Wealth asked about the drivers of investment amount going up 4 times. Paras Savla MD said the company has good amount of liquidity available in balance sheet that’s invested in liquid investments. DEEPINDS will be using those free cash in doing capex further.

• Jaikant Kasturi with Way2Wealth also asked about future orders for FY23. Paras Savla MD answered the company is witnessing good inflow on tenders and enquiries recently. DEEPINDS is quite bullish on getting new awards in coming 2-3 months. As a guesstimate, in a year or so orders could be over INR500 crores or so.

• Niharika Jain of Equitas Investment asked about the driver of operating margin fall of 680 bps. Paras Savla MD replied the company has seen pressure on consolidated basis. On standalone basis DEEPINDS is still good at above 40%. However, fuel price increase and spares cost has impacted the company.