Deep Industries Ltd: A Comprehensive Financial Analysis and Future Outlook

Deep Industries Ltd, incorporated in 1991, has established itself as a leader in providing critical services to the oil and gas industry. With a market share exceeding 70% in post-exploration services, the company is a powerhouse in the sector. Its diversified portfolio includes gas compression, dehydration, drilling, and integrated project management services. As of FY24, Deep Industries boasts a robust order book of ₹1,210 crores, reflecting its strong project execution capabilities and market presence.

Let’s take a closer look at the standalone balance sheet dashboard of the company and break down each component step by step to gain a comprehensive understanding.

Sales, Operating Profit & Net Profit Growth

From the image above, it’s evident that Deep Industries has shown consistent growth across all key financial metrics over the years:

• Sales Growth: Sales have increased steadily from ₹194 crores in March 2021 to ₹341 crores in March 2023, with a predicted surge to ₹518.38 crores by March 2025.
• Operating Profit: The company’s operating profit grew from ₹81 crores in March 2021 to ₹132 crores in March 2023. A further increase to ₹202.66 crores is expected by March 2025.
• Net Profit: Net profit figures indicate a solid upward trend, from ₹65 crores in March 2021 to ₹125 crores in March 2023. This is projected to reach ₹170.55 crores by March 2025.

Operating Profit Margin (OPM):

• Though the OPM peaked at 41.75% in March 2021, it has since stabilized around 39%, reflecting efficient cost management.

Earnings Per Share (EPS)

Deep Industries’ EPS has seen significant growth, increasing from ₹10.12 in March 2021 to ₹19.28 in March 2023. With a prediction of ₹21.89 by March 2025, the company’s profitability per share continues to strengthen, making it an attractive option for investors.

Return on Equity (ROE)

The company’s ROE has improved from 6.12% in March 2021 to 8.66% in March 2024, with a projection of 10.12% by March 2025. This steady increase in ROE highlights Deep Industries’ efficient use of equity capital to generate profits, further enhancing its appeal to shareholders.

Asset Distribution

In terms of asset distribution, Deep Industries has a well-diversified asset base totaling ₹1,907 crores. The majority of assets are fixed assets (₹979 crores), followed by other assets (₹566 crores), CWIP (₹220 crores), and investments (₹142 crores). This distribution indicates a strong capital base that supports ongoing and future operations.

Liability Distribution

The company’s total liabilities amount to ₹1,906 crores, with strong reserve at ₹1,411 crores, Other liabilities at ₹303 crores, borrowings at ₹160 crores, and equity capital at ₹32 crores. This balance suggests a healthy mix of debt and equity, ensuring sustainable growth while maintaining financial stability.

Why Deep Industries Ltd Could Be a Good Buy

Deep Industries Ltd has demonstrated solid financial performance over the years, with significant growth in sales, profits, and EPS. The company’s strategic focus on expanding its onshore drilling business and exploring new markets promises further growth. Additionally, the strong asset base and manageable liability distribution make it a resilient and potentially lucrative investment.

Now checkout the performance of stock starting from 2018 to till date

The stock is currently trading at Rs 366.90, it may be bought at the current price with stoploss at Rs 320 it may reach Rs 400-450 is short term, long term outlook of this stock is very strong

Conclusion

Deep Industries Ltd is a well-established player in the oil and gas services sector, with a proven track record of financial growth and strategic market positioning. Its robust asset base, prudent liability management, and forward-looking business strategy make it a strong candidate for long-term investment. As the company continues to expand and innovate, it offers significant potential for investors looking to capitalize on growth in the oil and gas industry.

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