Synopsis: Shares of Deep Industries Ltd gained 5% after securing a Rs 108 crore compression services order from GAIL (India) Limited, improving medium-term revenue visibility and earnings outlook. Strong execution with marquee PSU clients supports growth prospects and investor confidence amid improving financial performance.
The shares of this company, which is in the business of oil and gas field services and specialises in providing air & gas compression services, drilling and workover services, and gas dehydration services, are in focus after the company bagged a contract from GAIL for compression services.
With the market cap of Rs 2,331 crore, the shares of Deep Industries Ltd have gained 5% and made a high at Rs 365.3 when compared to its previous day closing price of Rs 348.30 and are trading at a PE of 11.2, whereas its industry PE is at 10.8.
About the order
Deep Industries Limited received a contract worth Rs 108 crore from GAIL (India) Limited to provide compression services at the RT-USAR facility right through the end of the term of the contract, thus supporting Deep Industries Superior Gas Compression Services’ position in the marketplace. Given the average duration of the contract is 880 days, it has a strong medium-term revenue visibility for Deep Industries and will provide predictable cash flows to support the company’s operations.
The order represents a key component of the company’s core business vertical and indicates that the demand for Deep Industries has continued due to its technical expertise and capabilities to support the expanding natural gas industry in India. Working for a major public sector undertaker like GAIL increases the company’s ability to successfully bid and execute additional gas compression service contracts as well.
Because the contract is long-standing in nature, the company will be able to realise enhanced asset utilisation as well as the operating leverage provided to it over the 880 days of execution. This enhanced utilisation of assets will not only greatly improve margins, therefore providing predictable recurring revenue, but also greatly improve visibility into earnings, enabling better capacity planning in the long term, and deploy capital more effectively.
Financials
The revenue from operations for the company stood at Rs 221 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 131 crores, up by about 69 per cent YoY. Similarly, the net profit stood at Rs 71 crore in Q2 FY26, up compared to the Rs 42 crore profit in Q2 FY25.
Many of Deep Industries’ clients are some of the largest public sector and private companies involved in energy, such as GAIL, ONGC, Oil India, and Reliance Industries. Many repeated businesses from the largest oil and gas operators demonstrate that the company has established its technical capabilities as trusted and properly executed on multiple occasions with companies having significant market share with high barriers to entry.In addition, their broad base of customers means less reliance on a few large customers, which increases long-term revenue stability.
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