Why Deep Industries Share Price is Rising

India's energy sector has witnessed a resurgence, driven by factors such as economic growth, infrastructure development, and rising energy demand.

This growth has created opportunities for companies operating in the oil and gas industry. Deep Industries, a leading player in the oil and gas sector, has been a major beneficiary of this positive trend.

The company specialises in providing engineering, procurement, and construction (EPC) services for onshore and offshore oil and gas projects. Deep Industries has a strong track record of executing complex projects and delivering value to its clients.

The company's stock has been on a remarkable journey, with a surge of 81.6% in the past year and 86.5% in 2024 alone. This upward trajectory culminated in a 52-week high on 9 September 2024, in a single day its share price rallied 20%.

Let's understand why Deep Industries share price surged 20% in a single day.

Multiple Orders

Deep Industries share price soared to reach an all-time high on 9 September 2024 after securing a significant order from ONGC worth Rs 14 bn (bn).

The most recent ONGC order, valued at Rs 14 bn, is for a 15-year contract to enhance production at ONGC's Rajahmundry Asset.

This contract, which more than doubles Deep Industries order book, underscores the company's growing presence in the oil and gas services sector. Such substantial orders not only diversify the company's revenue streams but also boost profitability, creating long-term value for shareholders.

The single-day rally marked the latest in a series of gains, with the stock up 44% over the past month.

In addition to this major order on 9 September 2024, Deep Industries also secured other significant contracts. On 23 August 2024, the company won an order worth Rs 630 million (m) from ONGC. This contract involves providing services for a skid-mounted modular gas separation system and gas compression units at ONGC's Tripura Asset for a period of three years.

Earlier, on 13 July 2024, it received another order valued at Rs 820 m. This contract is for charter hiring workover rigs, with one rig designated for ONGC's Tripura operations and another for Rajahmundry, each for a three-year term.

Multiple orders typically boost a company's share price as they signal strong business prospects and financial stability. Investors often view such contracts as indicators of future revenue growth and improved earnings, which, in turn, drive share price appreciation.

What Next?

Looking ahead, Deep Industries is well-positioned to capitalise on the growing opportunities in India's oil and gas sector.

The company plans to expand its portfolio by providing value-added services, particularly in the gas processing and production enhancement segments. With a strong order book and consistent inflow of new orders, Deep Industries aims to strengthen its market presence.

The company is focusing on leveraging the government's push for a gas-based economy. As India targets increasing the share of gas in its primary energy mix to 15%, significant investments are expected in the gas sector.

The company is poised to benefit from these investments, as it offers various services in natural gas processing, which are likely to see high demand.

In the coming years, Deep Industries is also eyeing opportunities in the exploration and production sector. India is expected to attract investments worth up to US$ 100 bn by 2030, and the government's Open Acreage Licensing Policy (OALP) rounds will bring new exploration blocks under development.

These developments present immense opportunities for the company to expand its oil and gas support services.

Additionally, the company's recent acquisition of Dolphin Offshore is expected to enhance its capabilities in both onshore and offshore oil and gas services. The refurbishment of its barge asset, Prabha, is nearing completion, and it is expected to contribute to revenue from the next quarter.

The company is also exploring opportunities for deploying other assets, such as diving support vessels and anchor handling tugs, both locally and internationally.

Financially, the company is maintaining strong margins and has shown robust growth in revenue and profitability.

How Deep Industries Share Price has Performed Recently

In the past five days, Deep Industries share price has surged 24.2%. In the last month, it has rallied 44%.

The stock price has rallied 86.5% in the 2024. Additionally, it has surged 81.6% in the last year.

The stock touched its 52-week high of Rs 477.2 on 9 September 2024 and a 52-week low of Rs 226.9 on 13 February 2024.

About Deep Industries

Deep Industries is a leading solution provider in the energy sector.

The company specialises in providing air and gas compression services, drilling and workover services, gas dehydration services, and also having expertise in Integrated project management services.

The company has grown up to be a "one stop solution" provider for every need in oil and gas field operations by providing various equipment and services under rental and chartered-hire basis.

Its comprehensive portfolio includes various machines / equipment / tools to be used in the oil and gas industry from exploration & production services to the mid-stream services.

For more details about the company, you can have a look at Deep Industries' factsheet and Deep Industries' quarterly results on our website.

For a sector overview, read our energy sector report.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...