Broker’s Call: Deep Industries (Buy)
The company sustained a healthy revolving order-book of around ₹3,090 crore, providing strong medium-term revenue visibility, despite executing contracts worth ₹295 crore during Q2FY27
Deep Industries posted impressive financial results for Q2FY27, with revenue surging 34% year-over-year to ₹295 crore, driven by new project contributions. Gross profit rose 17% to ₹144 crore, but the profit margin dropped to 48.7% due to increased material and maintenance expenses. EBITDA climbed 16% to ₹110 crore, but the margin declined slightly to 36% due to higher operating costs and lower margins.
Other income fell 17% YoY, partially offset by reduced interest expenses. Adjusted profit rose 13% YoY to ₹765 crore, yet it declined 10% QoQ, with adjusted profit margin contracting 461 bps YoY to 25.9%. The company maintains a robust order book of around ₹3,090 crore, providing medium-term revenue visibility, despite securing contracts worth ₹295 crore in Q2FY27.
Management forecasts revenue growth of 30-35% in FY27 and FY28, mirroring the growth in the existing order book and bidding pipeline. PEC is projected to contribute to production from Q3FY27, fueled by planned capital expenditure of Rs1.5bn over the next year. The company anticipates new PEC tender opportunities in H2FY27, further bolstering growth prospects.
Management expects PAT to range between ₹350-370 crore in FY27 and ₹470-500 crore in FY28. Given government focus on energy security and favorable industry tailwinds, analysts remain bullish on the company's long-term growth potential. They retain their estimates, projecting a healthy revenue/EBITDA CAGR of 25.2%/26.4% over FY26–FY28E, alongside maintaining operating margins of ~40-41%.
Consequently, they revise the PER multiple to 13x PER FY28E and adjust their TP to ₹805 (previously ₹675). The recommendation remains BUY.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
