Jindal Drilling & Industries Limited (JINDRILL.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jindal Drilling discuss Q1 FY '26 Results Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan. Thank you, and over to you, sir.

Thank you, Nidhi. A very good afternoon to everyone. It's my pleasure to welcome all the participants and the management represented by Mr. Raghav Jindal, Managing Director; and Mr. Kaushal Bengani, Deputy General Manager, Investor Relations and Finance for this call. I hand over the call to the management for their initial comments, and we can move on to the Q&A after that. The floor is yours, sir.

Thank you, Mr. Varatharajan. Good afternoon, shareholders, and thank you for joining our earnings call. We've had a very good quarter as was expected. Revenue and EBITDA improved due to recent acquisition and full quarter operations of Jindal Pioneer. Further, one of our rigs, Jindal Explorer, was dehired in May 2025 and is currently under refurbishment. It will be redeployed in October 2025. However, this dehiring has not impacted our profitability. I will briefly summarize key financial indicators. On comparison of Q1 FY '25 -- sorry, on comparison of Q1 FY '26 with last quarter Q4 FY '25, total revenue was similar. However, EBITDA increased by 23% (sic) [ 42% ] from INR 87 crores to INR 107 crores. PAT increased by 5% from INR 53 crores to INR 55 crores (sic) [ INR 56 crores ] and EPS increased from INR 18 to INR 19 per share. These figures are stand-alone figures. The consolidated figures are even better at the PAT and EPS level. The increase in profitability was on account of income from owned rig Jindal Pioneer. Whilst revenue from operations increased from INR 245 crores to INR 254 crores, there was a decline in other income due to ForEx fluctuation, leading to similar revenue as last quarter. The improvement in earnings was communicated in our earlier calls, and we have managed to live up to the guidance given. I would now like to take you through our earnings presentation. The first slide talks about Jindal Drilling & Industries. We are the leading offshore drilling services contractor in India's oil and gas sector. We have more than 35 years of experience in the sector of offshore drilling. We are supported by an efficient and experienced operational and management team who ensures that our efficiency is not compromised and we achieve highest levels of safety. We have 6 rigs in our fleet and are currently operating 4 with ONGC. One rig Jindal Explorer is under refurbishment for next ONGC contract and 1 rig is currently engaged overseas. In addition to offshore jack-up rigs, we also provide mud logging and directional drilling services. The rigs that we have are detailed on the next slide. In addition, we have also put out the total order book of the company bifurcated rig-wise and we have bifurcated the order book year-wise so that the amortization of order book is easily understood by interested individuals. The quarterly highlights and detailed financials are on the next 4 slides. A key point to note is on Slide 11, where you would see that our net cash position has not changed despite the acquisition of rig, Jindal Pioneer, which only indicates strong operational profitability. Our shareholding structure is given on the next slide. That concludes our brief, and we would now request Mr. Varatharajan to open for questions.

[ Please pick it up ]. Yes.

Thank you very much. Yes, sir. Thank you very much. [Operator Instructions] The first question is from the line of [ Apurv Bandhi ] from White Stone Financial Advisors Private Limited.

Yes. Congratulations for the good set of numbers. So my first question is on the -- what is the book value of our rigs? Like, the book value is currently INR 795 crores in the books, but what is the market value I want to ask?

Market value fluctuates depending on the availability of rigs in the market and the crude oil price. The most recent rig purchase and sale was that of Jindal Pioneer, which was done for $75 million. That is a rig which was manufactured in 2015.

Okay. Sir, but this Jindal Pioneer is the one which we have bought recently, right? I want to ask that the old rigs which we have, for example, Jindal Supreme or Discovery one, right, what is the market value for those rigs and the book value? I just wanted to understand that the value which we depreciate, right, the current value of the rigs is less in book value or it's more in the book value than the market value?

Market value is generally higher for old rigs because of depreciation. And the fact that these rigs are participating in the same tenders in which new rigs are also participating. But if you're looking for a figure, we cannot provide that to you right now because we have not undertaken a valuation exercise.

Okay. Okay. And sir, my next question is like I understand that we have done a new acquisition like in the recently. But like when are we planning for the next acquisition or like how we are headed for the new growth in the company?

So we are actually based on the ONGC tenders. ONGC tenders have been a little sluggish. If there are new tenders coming up, we will be looking at further rigs other than the ones which we have in our fleet. Jindal Pioneer is going to be bid in the ONGC contract whenever they come out with a tender. And other than the rigs, we are not really looking at anything more as of now.

And sir, according to you, that currently, demand is sluggish, right, as you have mentioned. So the charter rate also depends on that.

We saw a few tenders by ONGC, which were either delayed or canceled. So this is also because there is some work going on in ONGC with BP and which is supposed to end this year, and they will be coming out with new plans for 2026.

[Operator Instructions] The next question is from the line of Faisal Hawa from H.G Hawa and Co.

Sir, 3 questions. What is the current per day hiring rate of rigs in the international market? Second question is that Mr. Raghav Jindalin a previous con call had mentioned that this $40,000 per day rig that we hired out to ONGC was more like a one-off, and we expect much better rates in coming ONGC auctions also and particularly when we have another rig coming up for auction in October, I think. So does that statement still hold true or there are some situations which have changed again? Third question is, sir, that there are some rigs in one of our sister concerns also. So is the management thinking in terms of consolidating all this in balance sheet?

So the international rig rate currently is upwards of $80,000 -- between $80,000 and $90,000. Yes, the statement that the last tender went for a very low price was a one-off, and we expect the rates to become better again, holds true because it was due to competition that one of our competitors bid a very low rate because they had 3 rigs idle and they wanted to desperately get one into action. So it was a one-off, and we hope to achieve the international market prices or slightly lower what ONGC usually gets back again. Consolidation, nothing as such in mind, but eventually, we would prefer to have the -- all the rigs in one balance sheet with no time lines for that.

And sir, continuing from the previous participant's question regarding the present value of the rigs. I know for a fact that these rigs would be valued at much higher than book value. But most of the rig owners all over the world are at present not even making like a simple interest on the current value of the rigs. So what could change from here on? Do you feel that many of these people would grow tired and sell the rigs or maybe the rates will further go up to really justify the capital investment of such rigs?

See, if you have to buy a new rig today, it is upwards of $250 million. And only the new generation rigs are really which have value. And if there is no contract, then people are selling it. People are selling it as low as $60 million, $70 million as well. And if there is a demand for one particular rig and it is being seen, we have been offered rates of more than $130 million also. So like what Kaushal said, we don't have a -- it's very difficult to estimate the market value of these rigs. It all depends upon supply and demand at that particular time for a particular aspect.

[Operator Instructions] The next question is from the line of Faisal Hawa from H.G Hawa.

So sir, can you give some estimates as to what our profitability will look in the coming year, given that most of the rigs are hired for longer time? And what kind of CapEx that we will probably also have in this coming year, particularly this FY '25, '26?

In FY '25, our revenue was INR 884 crores and EBITDA was INR 237 crores. In FY '26, we estimate that revenue will be in excess of INR 925 crores and EBITDA will be between INR 360 crores to INR 380 crores. Going forward, in FY '27, even though there are a couple of rigs getting hired in FY '27, our revenue will be almost INR 900 crores in FY '27 and EBITDA will again be in the range of INR 360 crores to INR 380 crores for financial year FY '27. This is assuming that Jindal Pioneer gets deployed at a very low rate of $40,000 per day. These are very conservative projections. I want to stress this repeatedly that these are conservative projections based on a assumption that Jindal Pioneer would be deployed on the next contract at $40,000 per day. I am not saying that Jindal Pioneer will get deployed at that rate. We expect the rates to be much higher. But, so that our projections are not overstated in any shape or form, we have taken a conservative view. So in summary, the profitability that we will achieve in FY '26 will be replicated in FY '27. And if rates go up in that interim period, then profitability in FY '27 will be higher than the profitability in FY '26.

And is it a good assumption to make that our depreciation will be quite higher now and interest outgo will be almost 0. So basically, cash PAT will almost mirror the EBITDA?

That is correct. If you see our finance cost has continued to decline, and it is only INR 2.5 crores in June 2025. This will further decline as and when the gross debt is paid. And depreciation will also increase when more rigs are acquired, not before that.

Okay. But our operating profit in the first quarter was around INR 107 crores. So I mean, do you think that this INR 380 crores is being a little conservative?

Sir, these are reasonable estimates because Jindal Pioneer is a profit-making center, and it is expected to be hired in September of this year. And then it will go into refurbishment. So for the third and fourth quarters of this financial year, we do not expect any income from Jindal Pioneer. That is why we -- yes.

I understood. I understood. So basically, will we also play contrarians and if we get some rigs at very good rates, try to buy them out now that we can easily raise debt at a very good rates?

Yes. So like I told you, if a contract in ONGC is there and we have more rigs that we can provide, we would definitely be looking at acquiring them.

And even renting them?

Whatever is available, either a bareboat charter is one option or the other option, which is more feasible for us to be -- is to just buy them out.

Sir, is the management doing anything to improve the liquidity on the stock in terms of -- because our equity also remains quite low. And I mean, the dividend payout so far have been not very high. So now that the cycle has turned for us, are we looking at doing anything on that front?

I mean I really can't comment on that.

But we will definitely not put in any funds into equity mutual funds or anything of that kind or if we have extra liquidity?

Mr. Hawa, can you please repeat your question? We missed it.

Will we -- are we on record to say that we will not put the liquid funds into any kind of equity mutual funds or this thing going forward?

We will not invest operational surpluses in equity mutual funds. We want to retain the operational surplus because we have to incur refurbishment expenditure as and when rigs will get dehired.

Okay.

And then amortized over the duration of the contract.

Okay. And can you give some light as to what the ONGC projects -- projections are for CapEx or something or these are things which are not really very reliable to even take any kind of strategy on?

We know that they have another tender coming out by September. And other than that, we don't know much on...

So is there any connection between new oil being discovered in various regions and kind of the rigs being deployed or there is no such connection?

[ In terms of the ] demand, like I told you, will go up because we are working with BP right now for the last 2 years, last 1.5 years, another 6 months to go. They will come out with a more aggressive and a better plan on how to drill. So we can expect them to get -- become more active.

And do we have any connects with Aramco also or these are again open tenders and anyone get participate in?