Deep Industries Stock Rerating In Sight: Systematix’s Report
Systematix has initiated coverage on Deep Industries Ltd. with a ‘Buy’ rating and set a target price of Rs 693. The company is expected to undergo a rerating in the stock market. Deep Industries currently holds an order book worth Rs 30 billion, which is equivalent to 5.2 times its FY25 revenue.
Growth Prospects for Deep Industries
Deep Industries is at a pivotal moment with a strong order book, favorable industry trends, and ambitious expansion plans across its existing and new ventures. The company anticipates substantial earnings growth through:
- Increasing the number of rigs from 14 in FY24 to 20 in FY26E with firm contracts in place
- Significant progress at its integrated gas processing facilities with promising Ebitda margins
- Securing a new Production Enhancement Contract from ONGC worth Rs 14 billion
- Reviving Dolphin Offshore enterprises by acquiring new vessels for increased revenue contribution
With a proactive approach to growth projects, Deep Industries plans substantial capex towards expanding its operations. The company’s unique capabilities in the oil and gas services sector position it for sustainable growth with limited competition.
Revenue and Margin Forecast
Based on recent contracts and future assets, Deep Industries is expected to achieve a robust ~31% revenue CAGR over FY25-FY28, with an Ebitda margin projected at 44%-45% by FY28E. Concerning the stock’s valuation, it currently trades at 12.5x/10x/8.4x FY26E/FY27E/FY28E earnings.
Key Risks and Conclusion
While the outlook is positive, key risks such as execution delays, regulatory challenges, and fluctuating crude oil prices could impact Deep Industries. Despite this, the company shows promising growth potential in the coming years.
For the full report, click here.
Source: NDTV Profit
Disclaimer: This article is not investment advice. Consult a financial expert for personalized guidance.
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