Deep Industries FY26: Strong Growth, Cleaner Balance Sheet, and a Steady INR 3,000 Crore Order Book

Deep Industries closed FY26 with a sharp step-up in operating performance and a notable balance sheet clean-up. On a consolidated basis, revenue rose to INR 890.71 crore from INR 576.13 crore in FY25, a year-on-year increase of 54.60%. EBITDA increased to INR 424.82 crore from INR 263.80 crore, up 61.04%, while EBITDA margin stayed strong at 44.24%.

Reported profitability was affected by a large exceptional item, but management was clear that the adjustment was non-recurring and non-cash. The company wrote off legacy trade receivables inherited with Kandla Energy and Chemicals Limited, which Deep acquired in March 2025 through the insolvency route and later merged into the company effective 30 March 2026.

In parallel, business momentum remained healthy. Deep reported a consolidated order book of around INR 3,007 crore as on date, continuing a pattern of revolving orders above INR 3,000 crore. Management also stated that single-client dependence has been reduced to below 40% of total operating revenue, helped by diversification and overseas operations.

FY26 performance: growth with margin discipline

The FY26 consolidated P&L indicates the company expanded the top line while keeping operating profitability stable. Operating expenses rose, but EBITDA grew faster, indicating that utilization and pricing supported margins. Other income increased materially to INR 69.54 crore from INR 32.33 crore.

A key feature of the year was the exceptional item of INR 208.28 crore, primarily driven by the write-off of Kandla legacy trade receivables. Management explained it followed a 12-month reconciliation and recovery program, and concluded the receivables did not meet realization criteria.

Operational cash generation remained strong. The company reported cash flows from operations of INR 270.09 crore in FY26 versus INR 209.95 crore in FY25.

Balance sheet and working capital: improvement, with some receivable overhang

Deep highlighted balance sheet strength in the presentation and linked it to improved working capital efficiency. Receivable days reduced to 131 days in FY26 from 275 days in FY25. Management noted that the write-off of old Kandla receivables helped reduce the working capital cycle.

The company also disclosed that Dolphin group has legacy receivables outstanding. In the concall, management referenced about INR 160 crore of Dolphin group trade receivables retained on the books due to arbitration awards received in their favour and an expectation of recovery.

Leverage metrics remain conservative. The presentation stated total debt of INR 202.98 crore as of 31 March 2026 and a debt-to-equity ratio of 0.13. Debt/EBITDA was cited at 0.48 times for FY26.

Operations and strategy: broad portfolio and a push into bigger rigs and offshore

Deep’s core positioning is as an oilfield services provider across a large portion of the post-exploration value chain. The company’s stated asset base includes 20 onshore rigs (6 drilling and 14 workover) and more than 80 gas processing units. Its business verticals span natural gas compression and dehydration, charter hire of entire gas processing facilities, integrated project management services, and production enhancement.

Offshore services are being built through Dolphin Offshore Enterprises (India) Limited. The presentation mentioned the Prabha DP2 accommodation barge, which has commenced revenue generation. However, management also indicated that offshore expansion will be watchful and selective, adding assets one by one.

A notable growth lever discussed for FY27 and beyond is higher capacity drilling rigs. Management said the company is exploring 2,000 horsepower drilling rig opportunities through a JV route. Capex for such rigs was estimated in the concall at around INR 100 to 120 crore per rig, depending on equipment availability, and funding would be through internal accruals and debt.

FY27 outlook: guided growth, steady margins, and higher capex

Management guidance for FY27 was constructive and largely numeric. The company indicated an expectation of 25% to 30% year-on-year growth. EBITDA margin is expected to remain around 44% to 45%, with a possible variation of 1% to 2%.

Capex for FY27 was guided at around INR 300 crore, including about INR 150 crore under the production enhancement contract. Management added that capex could rise if offshore opportunities materialize.

The order book remains central to the narrative. Management explained that the INR 3,000 crore order book includes one 15-year contract, while the rest carry an average life of about 2.5 years. They indicated more than INR 800 crore of orders could be executed in FY27 from the existing book.

The main operational uncertainty discussed was the incident at Mori-5 well in Andhra Pradesh, where a gas leak during workover in January 2026 led to a delay of 5 to 6 months in the production enhancement timeline. Management stated there was no loss of life, the event was contained within five days, and the stop production order applied to that specific well.

Takeaways

Deep Industries ended FY26 with strong growth in consolidated revenue and EBITDA, improved operating cash flow, and a meaningful reduction in receivable days. The company also chose to clean up inherited Kandla receivables through a large write-off, positioning it as a balance sheet strengthening move.

For FY27, management is guiding to 25% to 30% growth and stable EBITDA margins around the mid-40s. Execution against the INR 3,000 crore order book, normalization of the production enhancement timeline after the Mori-5 incident, and disciplined capex deployment into rigs, gas processing units, and selective offshore assets will likely shape the year.