Deep Industries Ltd
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Q2-2026 Earnings Call
AI Summary
Earnings Call on Nov 10, 2025
Strong Growth: Deep Industries delivered robust results, with Q2 FY '26 revenue up 69.2% and PAT up 71.4% year-on-year.
Order Book: The order book stands at INR 3,050 crores, supporting strong revenue visibility for the next several quarters.
Production Enhancement: The Rajahmundry production enhancement contract is ramping up well, expected to contribute over INR 140 crores in annual revenue from next year with 50% EBITDA margins.
Margin Outlook: EBITDA margins remain healthy at 45-46%, with management expecting further improvement as higher-margin contracts scale up.
Guidance: Management projects at least 35% year-on-year revenue growth for both FY '26 and FY '27.
Asset Expansion: Several new rigs and offshore assets are being deployed, with additional vessel acquisitions planned.
Fundraising: The company is planning a QIP of over INR 300 crores to fund expansion and acquisitions.
Sector Tailwinds: Management highlighted strong government policy support and continued demand in India's oil and gas sector.
Deep Industries reported significant year-on-year revenue growth, driven by new asset deployments and increased activity levels. Management guided for at least 35% growth in FY '26 and expects similar momentum in FY '27, supported by a strong order book and continued expansion in both onshore and offshore segments.
The company’s order book has reached INR 3,050 crores, offering robust revenue visibility for the next several quarters. A substantial portion of the order book relates to long-term production enhancement contracts, while the rest is executable within 2.5 years. Management believes current growth rates are sustainable for at least two years given this pipeline.
EBITDA margins remained stable between 45% and 46%, with management expecting further improvement as higher-margin projects, like production enhancement and gas processing, scale up. Stand-alone margins (excluding other income) are expected to recover to around 40% in coming quarters after recent moderation.
The Rajahmundry production enhancement contract is progressing as planned, with stable production above baseline and incremental contributions expected. Full-year revenue from this contract is projected to exceed INR 140 crores from next year, with EBITDA margins around 50%. Management expects more such opportunities as government pushes for increased domestic production.
Several new rigs are being deployed and additional offshore vessels are being shortlisted for acquisition. CapEx is expected to reach INR 600 crores, with INR 100 crores already spent. The company is targeting high-margin segments and expanding both onshore and offshore capabilities.
Deep Industries is planning to raise over INR 300 crores via a QIP to support expansion, asset acquisitions, and maintain a low-leverage balance sheet. Management emphasized cautious leverage to support sustainable growth and be prepared for future acquisition opportunities.
ONGC remains the largest client, accounting for about 60% of revenue, though this is down from 75-80% in earlier years due to diversification into private and overseas clients. Competition is expected to rise, but management believes its technical edge and long track record will help sustain growth.
The company is benefiting from strong government support for domestic oil and gas production, visible through increased tender activity and contract awards. Management sees continued policy tailwinds driving demand for its integrated services.
Ladies and gentlemen, good day, and welcome to the Deep Industries Q2 and H1 FY '26 Earnings Conference Call hosted Adfactors PR. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Paras Savla, Chairman and MD of Deep Industries for their opening remarks. Thank you, and over to you, sir.
Good morning, everyone. Thank you for joining us today. It's a pleasure to connect with all of you as we discuss our performance for the second quarter and first half of FY '26. I trust you had a chance to go through our results, press release and investor presentation available on the company's website and stock exchanges. I'm joined by our Director of Finance and CFO, Mr. Rohan Shah, who will share a detailed financial overview after my address.
The quarter 2 and first half of FY '26 has been another period of outstanding performance and strong execution for Deep Industries. India's oil and gas sector continues to witness a renewed momentum backed by the government's strong push for domestic exploration, production growth and the long-term energy security. This ongoing activity has created a positive business environment, and we continue to benefit from it as one of the key integrated services provider in the country. Deep Industries has maintained its growth trajectory by enhancing operational efficiency, deploying assets effectively and deepening engagement with marquee clients in both PSUs and private segments. We at Deep Industries have always believed in providing value-added services to our clients. Value-added services can give one-stop solution to the client, and it reduces cost and save time for them with efficient output. A value-added service for us has become margin assertive opportunity and gives us flexibility to perform in one more efficient manner. Our production enhancement contract at Rajahmundry field is progressing well, with stable production achieved and further optimization measures underway. We expect this project to deliver incremental contributions to our output in the coming quarters. In the midstream segment, we continue to operate one of the India's largest fleet of gas compression units while also expanding our footprint in modular gas processing systems under the lease, operate, maintain model. We are seeing increasing interest in these solutions from PSU clients operating in challenging gas fields where reliability and cost efficiencies are critical. As of now, our order book stands strong at around INR 3,050-odd crores, providing long-term revenue visibility and reaffirming our healthy business pipeline. Looking ahead, our focus for the remainder of FY '26 will be on: one, achieving the highest levels of operational efficiency and safety across all our sites; two, strengthening our participation in production enhancement and unconventional resource development; three, scaling up the deployment of charter hiring of entire gas processing facilities; and four, pursuing selective value-accretive opportunities that enhance our service offerings and profitability. The first half has laid a solid foundation for the remainder for the year. With a robust project pipeline, a favorable policy environment and strong execution capabilities, we are well positioned to capitalize on emerging opportunities in India's energy sector. We remain committed to sustainable growth and long-term value creation for all our stakeholders.
With that, I now invite Mr. Rohan Shah to present the financial highlights for quarter 2 and half year FY '26. Thank you.
Thank you, Paras [Foreign Language]. Investor friends, thank you for joining the call today. I am pleased to share with you another strong quarterly and half yearly performance of Deep Industries Limited. All comparisons are on a year-on-year basis, which would provide a fair evaluation. For the quarter ended September 30, 2025, revenue for Q2 FY '26 stood at INR 221 crores, up by 69.2% year-on-year. Good control over operating costs and enhanced utilization of key assets helped us post EBITDA of INR 112.9 crores in Q2 FY '26, reflecting 74.7% Y-o-Y growth with an EBITDA margin of 46.6%. We continue to maintain healthy EBITDA margins in the range of 45% to 46%, ensuring strong operating cash generation to support our future growth trajectory. Net profit for the quarter was INR 71.2 crores, up by 71.4% Y-o-Y.
Now on half year ended September 30, 2025, revenue for H1 FY '26 stood at INR 420.5 crores, registering 65.5% Y-o-Y growth. EBITDA for H1 FY '26 was INR 207.9 crores, up by 64.9% Y-o-Y with an average EBITDA margin of 45.7%. PAT for H1 FY '26 was INR 132.9 crores, showing 65.6% Y-o-Y growth. As on date, our order book stood at INR 3,050 crores, providing strong revenue visibility for coming quarters.
With this, I now open the forum for question and answer. Thank you.
[Operator Instructions] The first question comes from the line of Sudeep Anand from Systematix.
Many congratulations for a very good set of numbers. Sir, a few questions. We'll start with the rig business. What's the current status of the couple of rigs which is likely to join the fleet in H2? And how do we see the tendering process and any guidance on rig addition for H2 and FY '27?
So, our couple of rigs are on the way from China to our site, and we are expecting them to get it deployed one in December and one in Q4. With regards to new opportunities, we have bidded quite a few tenders for rigs and we are waiting for their…
Okay. Sir, in terms of PEC, what was the gas price realization during the quarter? And what was the average production level?
Sorry, I just missed that.
Sir, under the production enhancement contract, what was the gas price volume and the realization?
So gas price realized was around $7.5 MMBtu. And average volume would be somewhere around 170,000 cubic meter a day. Yes.
The next question comes from the line of [ Akhilesh Rawat ] from [ Vedanta Vision Private Limited ].
First of all, sir, I want to congratulate on a good set of numbers. So, I have only one question. So as your -- as an investor presentation, you have mentioned that your order book has crossed INR 3,050 crores as of November 2025, so growing at a 53% CAGR since financial year 2022. So, what proportion of this order book is expected to convert into revenue over the next 12 to 24 months? And how should we think about the mix between high-margin segments and like charter higher gas processing facilities versus drilling and offshore services?
So out of this total order book of more than INR 3,050 crores, almost INR 1,300-plus crores is for production enhancement contract, which is for 15 years. So, if we remove that, more than INR 1,650 crores of order book is executable over 2.5 years.
One question, please. Sir, this ONGC production enhancement contract, as you mentioned in PPT is INR 1,402 crores for 15 years. And as you mentioned that majority of the revenue will come in first 10 years. So, can you please quantify like expected EBITDA margin range for this project and explain like how the revenue ramp-up will occur over financial '26 to financial '28?
So, we are expecting on a full year basis revenue from this particular contract to the tune of INR 140 crores to INR 150 crores from next financial year onwards. And the margins we are expecting out of this contract in range of around 50% kind of EBITDA.
The next question is from the line of Dhaval Popat from Choice International Limited.
Congratulations on a very good set of numbers. A follow-up on the question that was just asked regarding the Rajahmundry field operations ramp-up, how these are panning out? And what should we expect in the rest half of the year for this field, as in, should the revenues be in the line of about INR 35 crores or so? That is my first question. And second question I have is around if the oil prices dip from here on for the next year, what is the impact on the rig charter rates that we could see? And how much EBITDA margins could be impacted on the back of this?
Yes. So, from production enhancement contracts since we have now started crossing over baseline, so, revenue from H2, we can expect to the tune of around INR 35-plus crores and maybe even more. And from next year onwards on a full year basis, it should be more than INR 140 crores kind of revenue on a full year basis. To answer to your second question of crude oil price, I believe our majority of contracts are fixed price contract and they are long-term contracts of 3 years. So largely, movement in crude oil price is not affecting our services business because even if crude oil price is higher or lower, the activity of production is continuously going on in India being energy deficient country. And so, we have seen in last 20, 25 years, this crude oil price movement generally not affecting us much.
The next question is from the line of Sudhir Bheda from [ Bheda Family Office ].
Hearty congratulations to entire Deep team for delivering the exceptional results quarter after quarter. So, my hearty congratulation to entire Deep team. Sir, my 2 questions. Just wanted to understand about the other income part. So, is this kind of sustainable income or how we should look into it going forward to second half and next year?
Yes. The other income largely consists of interest and mutual fund M2M growth. And to a certain extent, it is a revaluation on foreign currency valuation on your overseas receivables. So more or less, we believe this kind of other income would continue in next half as well.
And sir, just wanted to understand the -- see, we have all-time high order book. And then just wanted to understand the order pipeline for next 12 months. How much we will bid and what is the winning ratio over there so we can have a fair idea about the next year's growth?
So, we have a bidding pipeline close to INR 700-odd crores. How much of that would get converted, it is only the matter of time. But out of our experience, we believe it would be a good substantial numbers that can get converted. But having said that, that is not only the bidding pipeline, there is a constant bidding happening. So, every month-on-month, we keep on bidding new projects. And therefore, these numbers are a little dynamic. They keep on increasing. So, as we speak, it's INR 700 crores, but it has a high potential to grow these numbers in the next quarters.
And lastly, sir, just wanted to understand, see, we will employ 2 rigs in next 2 quarters. And then next year also, we'll get the full revenue from Dolphin also. So, what is the next year outlook in terms of growth, if you can throw some light on that?
Yes. So, as you rightly mentioned, these rigs, which are being deployed in current year and...
Sorry, and also production enhancement. So, these 3 growth drivers would be there : production enhancement, additional rigs and then Dolphin. So then on these 3 accounts, what would be the growth outlook for next year?
Correct. So, production enhancement contract and new addition of rigs which have not contributed on full year basis in current financial year, they would start contributing revenue on a full year basis from next financial year onwards. And of course, Dolphin will also have full year revenue from next financial year onwards. So, all put together, we are expecting growth of another 35% to 38% kind of growth on year-on-year basis in next financial year as well.
The next question is from the line of [ Aryan Doshi ] from [ Davite Investments ].
Congrats on very good results. I just wanted to ask one question. So, the margins have been stable around 43% to 45% over the last few quarters. Given the PEC contracts and the Dolphin Offshore, the margins improvement, like the 45% number will increase or the number would be same in the next quarter? And also, the revenue growth rate, the numbers would be same or the number would be increased?
Yes. So, margin, we believe it should improve a bit going forward. And we are expecting our EBITDA margins to grow upwards beyond 45% in coming quarters. With regards to revenue, yes, it would be a little higher than the current quarters because the new assets would start adding revenue in coming quarters, and it will give a growth over previous quarters.
The next question is from the line of [ Siddhartha ] from [ KP Globalizing Finance ].
Congratulations for the good set of results. So, the only question is in the last con call, you have indicated going for some fundraise. So any -- can you give some color on that?
Yes. So, we have taken all required approvals for fundraise. And we are -- we have done some non-deal roadshows as well. So, we are waiting for just a perfect time to get into it.
So, what's the quantum of the fundraise you are looking at?
So yes, it is around INR 300-plus crores kind of quantum, which we are looking at it.
Okay. So, can we expect this to be closed by the end of financial year, I mean calendar year or financial year?
Yes, looking forward to it.
The next question comes from the line of Nirvana Laha from Badrinath Holdings.
Congrats on a great set of results. Sir, you commented on the other income. I missed that. Can you please repeat that?
Yes. So other income consists of interest income, then mutual fund income and mark-to-market of funds as well as some overseas receivables on foreign currency fluctuation.
Okay. So, none of that pertains to recovery of receivables, right? It's just the amount of receivables because of ForEx gain?
Yes, ForEx gain, fluctuation, correct.
And you said this is expected to continue for the next 2 quarters. Did I hear you right? Like why would you expect so? Because we have never been at these levels of other income in the past. It's been less than [ INR 1 ] crores.
Yes. So, interest and mutual fund income would definitely be continue to go
[Audio Gap]
as well. Of course, I cannot comment on revaluation gain on foreign currency.
Sure. Okay, sir. And if you can give some comment on the stand-alone growth? So actually, before this, we were also growing quite fast like by 30%, 40%. But for the last 2 quarters, we have now started showing 60% to 70% Y-o-Y growth in stand-alone. So what projects are actually contributing to this? Like why has the growth gone up to 50%, 60% now, which new projects are contributing? Because I don't think the production enhancement has started.
No, the production enhancement has, of course, started, but with a lower amount because it is just an initial phase. In addition to that, we have added quite a few assets in this year. Like in last 8 months, we have added 6 more rigs. So, I think those assets when it comes on operation, it will start adding into your top line. And in this entire gas processing services also, we have added one project. So, I think in last 2 quarters, there are sizable project which has been added into our operating fleet, and that has given growth on revenue.
Got it, sir. And so you expect for H2 also this kind of Y-o-Y stand-alone to continue 60% kind of growth?
Yes, yes. So H2 would continue the momentum, and we are expecting H2 would have a growth over H1.
Okay. That's great to hear. Sir, final question on Prabha. Is the full depreciation run rate in for the barge from this quarter? There's been a sharp jump in Dolphin depreciation. So, is the full amount -- quarterly run rate, is it [indiscernible] or can it increase further from here?
So the estimated life for depreciation, we have considered as 15 years. And so based on that, this depreciation would start kicking in. So, in last quarter, it was -- for some part, it was under capital work in progress. And so last quarter, depreciation would have been lower than the current quarter.
Right. So, INR 4 crores of depreciation you expect to continue? Or will it increase to like INR 5 crores, INR 6 crores in the coming quarters?
Yes, it would be more or less in that range. If we'll add further some addition to that asset, then it can increase. Otherwise, it would be in the same line. Congratulations on great execution.
The next question is from the line of [ Ankur Sawariya ], an Individual Investor.
I congratulate you on a very good set of numbers that you have given again and again. My first question is regarding the court case with ONGC. What is the status of that case, sir?
The arbitration one you are referring to?
Yes, yes. About you were expecting that to end in 2, 3 months. But I think for last 6 months, there is no update regarding the same.
Yes. So that is going on. And so we cannot comment on time line when particularly it is a court matter, but we are quite hopeful it should complete it soon.
And sir, regarding the receivables of Kandla, is there any positive update on that?
So currently, we are still under an evaluation stage. So as of now, there is no recovery from last quarter till now. But yes, we are hopeful, and we have started following up with them. So, we believe some good news should come in coming quarters.
Okay. And sir, production enhancement contracts since it has been about 2 quarters, so do you think that it is going on well and we can get more such contracts from ONGC?
Yes, we expect it. So there would be various bidding rounds coming up. And if that happens so, definitely, we would be bidding for it. And hopefully, we should win those -- some of those projects.
Congratulations on [indiscernible].
The next question is from the line of [ Rahil ] from [ Sapphire Capital ].
So firstly, you've given this consolidated basis guidance for next year. For FY '26, what can we pencil in in terms of growth? The 35% run rate should continue?
Yes. It should be -- I believe it should be higher than 35%...
For FY '26, you're saying, correct?
Correct.
Okay. But then given the PEC to kick in more revenue from next year and the new assets to contribute, then next year should also be 40% plus, correct, on a consolidated level?
Yes. So, we are expecting next year also more than 35%. How much over and above 35% we can -- we'll be able to achieve, I think that time will definitely give us the idea. But for sure, minimum 35%.
Okay. And we have seen the last 2 quarters with a positive bottom line. Will this continue for the rest of the year and ahead?
Yes, yes, of course.
Okay. So expecting this year to be profitable.
Yes. So, in fact, last year also, it was just a noncash entry, which has resulted into loss. Otherwise, that it was in profit only.
The next question is from the line of [ Gaurav Sachdeva ] from [ Sajak Securities ].
Sir, we were looking to add some more assets in the Dolphin offshore like vessels and other assets. So, when we’ll add that vessels…
Yes. So, we have identified and shortlisted few assets, and we are working on it. Once we'll be able to tied up those assets for contracts, we'll go for acquisition. So yes, we are on a quite advanced stage of that part.
Okay. And sir, for how many years we can look such 30% to 40% growth on a consol...
See, based on existing order book, we believe for next 2 years, this kind of growth is clearly visible. Depending on further addition to this order book, we can continue the momentum beyond 2 years as well.
And sir, regarding production enhancement these contracts, when do you think that ONGC will give such -- I mean, give such more contracts?
So their internal back office work is going on. So, we cannot comment on the exact time line when they will come up with such more tenders, but it is very much expected in coming quarters.
The next question is from the line of [ Deepak Kumar ] from [ IG Family Office ].
So, my question is to the tune of production enhancement contract. Have they started the execution?
Yes, yes. It has started execution. I think we have taken over that block in the month of April only. And we have started our work operations from April onwards, and it is now up and producing as per our expectation.
Got it. So, I think our share has to come when we produce more than 1.5 ppm a day. So how has been the experience till now?
Yes. So, we have crossed the baseline and this production is increasing above baseline. which is progressing as per our expectation. And we believe from next financial year on full year basis, we would be earning as per our expectation.
Got it. And how is the price realization now?
So, price realization, yes, so currently, it is in line with what ONGC used to sell. And with higher quantity coming up, we may take a call to sell at spot as well with higher price. But that these decisions are dynamic and depending on the volume and availability of clients. So yes, but we are quite bullish on that part as well.
[Operator Instructions] The next question comes from the line of [ Nishi ], an Individual Investor.
So my question was regarding acquisition of Trustedge Capital Limited. So, what are the plans for Trustedge Capital for next 2 years? And how does this acquisition align with your company, Deep Industries?
No, no, we are not acquiring Trustedge Capital.
No?
No, no. I think you misunderstood.
The next question comes from the line of [ Srikar Sai ] an Individual Investor.
Congrats on a great set of numbers, sir. So, it's regarding our offshore vessel acquisition. So, in the last 2 to 3 months, we have this Chinese ICBC, I mean, the commercial bank, which was auctioning off Bourbon class of vessels. So, 17 have been auctioned and most of them were laid up, sir. So, they were tending to bring them back on to service. I mean, once these buyers buy them, they're going to bring them back in the service. So did this put any downward pressure on the anchor handling tags or platform supply vessels, sir, because there were 17 which were auctioned off and there are another 8 or 9 which are in service, which are about to come to auction again. So, did it put any pressure on the offshore vessels so that we can actually buy them at a cheaper rate, I mean the ones which we have shortlisted?
No. So see, in offshore, entire globe is the market and largely our assets are deployed overseas only. So that market is quite huge. And I don't think by coming these assets into the market will be creating any pressure. Secondly, our contracts are long term. And so we believe we would not have any point for taking this as a pressure.
No, no, no, sir. I meant like the pressure in the selling rate. I mean if the selling rate comes down, we can actually buy the vessels at a cheaper price, right, because we haven't bought them, we are about to buy them, right? So this auction and this entire saga which will actually put that hangover effect and then push the prices downwards because there are another 7 or 8 in-class anchor handling sites which are about to come into the auction…
Yes, yes. So we have kept all options open. And since we would be applying a strategy of buying old assets only and getting them ready, so, we would definitely look for similar kind of opportunities as well.
Great. And one clarification regarding production enhancement contract. This INR 35 crores, is it the quarterly run rate? Or is it the half yearly run rate which we were expecting?
No. So in second half, we are expecting, in fact, more than INR 35 crores. So ideally, it should be more than INR 40, INR 45 crores in H2 on half year basis, I'm seeing. So -- and in this financial year FY '26, we are expecting total revenue of around INR 60 crores from this production enhancement contract. And from next year onwards, it should be more than INR 140 crores on a full year basis.
Okay. Great. And one small clarification. It's regarding ONGC sick well program, it looks a little bit like the production enhancement contract, sir. So, is it a production enhancement contract, I mean a little bit similar, ONGC sick well revival program, which is about to end in December, the tender?
So yes, ONGC sick well program is a little different than production enhancement. So sick well is basically that they are already -- they are not producing anything out of it. So, the challenges within sick well are different to the ones of the enhancement. So there are a few tenders that for sick wells, they have already been published. We are evaluating that probabilities, how potential are those. So, I think it will take some amount of time to evaluate and then perhaps we'll take some decision on that.
The next question is from the line of [ Vinay ] from [ IGA India ].
[Technical Difficulty]
I think your voice is breaking in between and we are not able to get exactly what you are trying to say.
Hello, am I audible now sir?
If you can repeat it with good frequency, yes. Or you can break your sentence in…
Sir, your revenue from INR 200 crores from last quarter to this quarter has been increased to INR 221 crores. So can you elaborate on that increase?
Yes. So that increase is primarily because of addition of new assets into operation. And this year, we are adding so many assets into our fleet with running contract. And so as and when these assets will be added into the operation, it will give you an incremental revenue.
[Technical Difficulty] So this sustainable next quarter with the current...
Sorry, we are not able to hear you. But yes, the momentum of growth would continue.
[Operator Instructions] The next question comes from the line of [ Rakesh Kumar ], an Individual Investor.
First of all, congratulations, sir, on great set of numbers. I have only one question. So, I was thinking about what kind of risks you see in the business, which could potentially hamper the growth going forward, right? We have been running on a great trajectory off late. But do you foresee more competition potentially coming in the area or something happens from like government direction perspective that could potentially hamper? So, what are 1 or 2 risks that stop of your mind, which can potentially hamper the growth?
Sorry So as the sector definitely gets more and more of business, potential business, competition definitely is bound to come. So that cannot be ignored. But having said that we have been into this industry for more than 3 decades. And I believe the edge that we have over the technical things and providing solutions to the client is something that matters the most. So even after having a competition, I think we have already sustained for the last 3 decades with a decent amount of growth. And I'm very sure that as we go forward, we'll continue with that trajectory.
Okay. That sounds great, sir. And sir, if I may add, it sounds like there is a large dependency on ONGC, right, from [indiscernible] business. So, what's the current breakdown looks like in terms of revenue coming from ONGC versus, let's say, other players?
Yes. ONGC has always been our largest client. And since you are into oil and gas support services, I believe ONGC has to be your largest client. And in terms of percentage dependency, yes, they are almost 60% kind of contributor to our revenue.
Got it, sir. Is there a push from your end as to diversify maybe or like bring in more private players or other players so that the risk kind of subsides a little bit?
Yes, yes. So we have, over a period of time, diversified with all other companies as well. So, in earlier years, ONGC used to be contributing more than 75%, 80% which we have eventually by adding a few more private clients and started focusing on overseas, this dependence is reduced a bit. But having said so, when you are operating in India and that too in oil and gas, ONGC would definitely be there.
The next question comes from the line of Rahil from Sapphire Capital.
Sir, quickly, you mentioned something about the fundraise. I'm just not aware about the nature of this. If you can just add a few more lines? And what is the route of this fund?
Yes. So, we are working towards raising funds through QIP. And that exercise we have started on. So, we are expecting to raise around INR 300-plus crores by the way of QIP.
Yes. But -- and this is to be used for just like expansion?
Yes, for expansion and for acquisition of new assets as well as for CapEx in production enhancement contract.
Okay. And you gave a breakdown of the order book, correct? INR 1,300-plus crores is PEC and the rest is other projects. So in the rest part of INR 1,700 crores or so, can you tell me how much proportion is like high-margin projects?
More or less margins are of similar nature for us. Of course, gas business is having a little higher margin than our other business verticals. But they are more or less in similar kind of proportion in the order book.
So you mean the gas business, let's say, in terms of value is same as the other projects in part of that INR 1,700 crores or so?
Yes, more or less in the same line, correct.
Okay. Okay. So can we expect in the coming 2 quarters, the margins to inch up?
Yes, we are expecting margins to improve further.
Okay. Any sort of bracket you can give what we can expect to end the year with?
That is a little difficult to quantify in terms of number. But yes, continuously, it is improving, and we believe it should improve further as well.
Okay. And these margins you are guiding in the beginning of the call, you said 45% to 46%, right, to maintain. This is with other income you're guiding?
Yes. So, in that, we are adding other income, yes.
The next question comes from the line of Pankaj Motwani from Equirus Capital.
So my only question is on the part of margins. So if I see the stand-alone margins, if I see stand-alone margin, excluding other income, that has been moderated to around 37% over the last 3 quarters versus the earlier guidance of around 40%. So, like do we expect the margins to recover going ahead? Or should we assume this to be a normalized margin for the future?
Yes. So, on a stand-alone basis, it should improve to 40% without considering other income. So, in coming quarters, we are expecting to improve from current level.
Okay. So is there any reason behind the margin fall from 40% to 37% in the last quarters?
Yes, so with an addition of production enhancement, the volume in overall revenue once it will start increasing from that particular project, overall margin will improve to that extent.
Okay. Got it. And just wanted an update on the [ anchor ], like we have taken 37% stake for the [ anchor ] in one of the company. So, like the revenue from that [ anchor ] has started contributing to our -- for this quarter?
Yes. So since it is less than 50% share, it would not be consolidated by line to line. So that would be contributing in bottom line.
But I'm not able to see the share of JV line item in the P&L portion. Like we have a JV, so there should be some share of JV line item.
Yes. So that would be coming up in coming quarters because the share would be distributed on a yearly basis.
The next question comes from the line of Saumil Shah from Paras Investments.
Congrats on a very good set of numbers. Sir, I joined a bit late, so I'm sorry if this question was answered before. So I wanted to know more on Dolphin Offshore. So what kind of revenues are we targeting in next 1 or 2 years? I mean, how can we see this business in the next couple of years? So just wanted your thoughts.
Yes So yes, this year, we are expecting to close Dolphin Offshore at around INR 100 crores of top line in FY '26. And from next year onwards, we are expecting good amount of growth with addition of a few more assets into the fleet.
So have you already -- I mean, have we already added those assets or we are in discussions?
No, we have shortlisted them. We have not yet added, but we are on advanced stage of negotiations.
Okay. And so what kind of growth can we expect in next 1 or 2 years because this INR 100 crores seems too less. So next couple of years, can you quantify?
Yes, yes. So the growth we are expecting in Dolphin would be more than 40% year-on-year. And since it is a high-margin business, so currently, we are operating on EBITDA of as high as 80-plus percent kind. And I think with that high margin, this kind of growth would be exceptional.
Correct. Correct. And sir, my final question for the first half of this year for Deep Industries. So we have -- we can see about 65% Y-o-Y growth if we compare first half to this first half. So can we expect similar growth in the remaining half of this year?
Yes. So growth would continue definitely. On percentage, I cannot give the exact guidance on 65% kind, but H2 would definitely be higher than H1. So growth would definitely be there.
Okay. And have you guided in terms of revenue for Deep Industries for this year?
This year, we are expecting to close with growth of more than 35% Y-o-Y. And I think we are right there on that trajectory. So even if we are not factoring growth in H2, it would be more than 38%, 39% kind of growth over previous years. So I think we are right there on those trajectory.
The next question is from the line of [ Yash Bishriya ] from [ Mavera AMC ].
Congratulations on a strong set of numbers. Sir, my question is more on the macros. So you said that India has always been a net importer and now we are moving on the part of energy self-reliance, correct? So any government push or any major policy changes that we see in the coming times since you are working closely with the PSUs and the government agencies. So any commentary on those lines?
Energy push is quite visible for the fact the kind of tenders, the kind of generation of inquiries are happening and the kind of orders that we are receiving. So the kind of demand that has been generated clearly demonstrates the push that government has. And if you even see to the production enhancement contracts or the wells or something. So this is also something a push that government is trying to make these fields more effective, whereby they can get more and more production of oil and gas. So I think this is a big time signal from the government that the push has been largely to get more oil and gas production.
The next question comes from the line of [ Arun ] an Individual Investor.
A couple of bookkeeping questions. First is regarding the Kandla Energy. I understand the receivable we believe we are not writing off as we believe we will be able to collect something. But are we taking any provision on that?
So we haven’t taken provision on that as of now because we are in an evaluation stage of those receivables. So as of now, we are not taking any provision.
Sir, I'm seeing your cash flow statement. We have given a loan at this time – to which we have given a loan given to?
Sorry, if you can repeat the question?
INR 23 crores, we have given INR 23.58 crores we have given I'm seeing in the cash flow consolidated. It is given to which company?
INR 23 crores. I’ll need to check.
INR 23.5 crores. Okay. Actually, my question was that I think we have around INR 100 crores of loans as of now given and we are raising a QIP of INR 300 crores. Maybe some rationale for we already giving loan and then we are raising equity. So just maybe some rationale which I’m missing to understand?
Yes. So largely the loans given to subsidiaries like Dolphin and other companies who are at the end of day…
Sir, not subsidiary. I'm talking about consolidated. Consolidated loan will not come a subsidiary.
[Foreign Language] on consolidated, you are saying. Correct. So there one loan is given to a company called Prabha Energy and it's a 12% interest-bearing loan. And that particular loan was originally given before demerger. So I think that is still continue there.
The next question -- the last question for today's conference call is from the line of Aryan Doshi from Investments.
I was just asking that given the company is already generating strong cash flows and has a very low debt level, what was the rationale behind raising INR 300 crores through a QIP is primarily to accelerate the INR 400 crore CapEx or to strengthen the balance sheet for future opportunities?
So, I would say both because we believe that our balance sheet should have the lowest possible leverage. As in our industry, we have always seen that people have gone wrong because of high leverage. And so, we believe that we should have leverage, which should be very much in control. And of course, the momentum and the growth we are foreseeing in coming years, it would definitely help us capturing that growth with such strong balance sheet.
And also, there are some possibilities we are looking around for acquisitions. So, when the acquisitions have to happen, we should be ready with our resources. So, there are multiple things related to the growth and acquisitions put together. And therefore, we are trying to raise these funds.
Also, sir, I was just asking that out of that INR 400 crore CapEx, how much has been done and how much has been in the future more -- like out of that INR 400 crore CapEx, how much more would be put to the [indiscernible]?
Yes. So total CapEx we are expecting is of INR 600 crores, of which INR 100 crores has already been done and balance would be doing going further, including the CapEx for production enhancement contract.
Participants, this was the last question for today's conference call. I now hand the conference over to Mr. Rohan Shah for closing comments. Over to you, sir.
Thank you, everyone, for joining this call. It was a pleasure interaction with you all. If you have any further queries, you can definitely approach us directly or through Adfactors PR. We would be happy to answer all your queries. Thank you.
Thank you, sir. On behalf of Deep Industries, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.