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Multi Baggers

Hem Securities

12.00 AM Jan 30th 2017

Deep Industries

BSE ID : 532760     NSE ID : DEEPIND


PEAK FROM RECO 343.70 12.16%

CURRENT PRICE 98.85 67.74%

Deep Industries Limited started in the year 1991, with a primary objective of catering the ever increasing demand for Oil and Gas Industry. We initiate a 'BUY' on the stock with a target price of Rs 410 with the medium to long term investment horizon.

Deep Industries Limited (DIL) is well diversified Oil & Gas Company serving the industry since 1991 with business interest in Air and Gas Compression, Work Over, Drilling, Gas Dehydration and Oil & Gas Exploration and Production. DIL is the first Company in India to provide high pressure Air and Gas compression and Gas Dehydration Services on charter hire basis. DIL is the largest Natural Gas Compression services provider and is the largest Gas Dehydration Service provider in India.

The company has registered decent results for the quarter ending September 2016. The standalone revenues grew by whopping 97.15% to Rs.67.50 crores vs. Rs.34.24 cr. in the year ago quarter. Operating profit grew at Rs.26.89 crores as against Rs.15.49 crores in the like quarter last year; representing growth of 73.59%. The adjusted net profit doubled at Rs.16.77 crore as against Rs.8.01 crore, depicting a sharp growth of ~109% y-o-y. Similarly, both the margins of the company witnessed a whopping growth on a yearly basis. Operating profit margin stood at 60.16% vs 54.76% and Net profit margin stood at 24.84% vs 23.39%.

Deep industries enjoy first mover advantage in Gas compression and dehydration in India. It also has long term association with US based vendors providing competitive edge to it. Ø The company has initiated investment in one of the blocks in North Karnapura under Exploration and Production division and revenues are expected to begin by 2018-19.


Deep industries enjoy leadership position in gas compression and dehydration business. With robust order book, well diversified business portfolio, increasing market share, wide client base and strong operating metrics; Deep Industries growth prospects looks promising. We believe the company is trading at an attractive valuation at 15.42x and 11.85x of consolidated FY17EPS of Rs.19.87 and FY18EPS of Rs.25.86. We initiate a ‘BUY’ on the stock with a target price of Rs.410 (appreciation of about 33%) with the medium to long term investment horizon.

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Disclosure of Interest Statement  - Company Name

1. Analyst Ownership of the Stock - No

2. Hem & its Group Company Ownership of the Stock - No

3. Hem & its Group Companies’ Director Ownership of the Stock - No

4. Broking relationship with company covered - No

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.


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