UNIDT - United Drilling

📊 NSE: UNIDT 🏢 Engineering 📅 Last Updated: 12/14/2025 14:44

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment (Engineering). Standalone revenue from operations grew by 25.99% YoY, increasing from INR 136.64 Cr in FY24 to INR 172.16 Cr in FY25. Consolidated Total Operating Income (TOI) grew from INR 129.97 Cr in FY24 to INR 168.27 Cr in FY25, representing a CAGR of ~12% for the FY22-FY24 period.

Geographic Revenue Split

While specific regional percentages are not fully disclosed, the company is targeting 10% to 15% of total revenue from exports and private companies. Significant orders have been received from overseas regions including Brazil and Venezuela to boost global presence.

Profitability Margins

Standalone Net Profit Ratio improved significantly from 6.71% in FY24 to 8.65% in FY25 (a 28.92% increase) due to higher net profit after tax. Standalone PAT margins rose from 6.64% in FY24 to 8.52% in FY25, primarily driven by an 8.72% decline in interest costs.

EBITDA Margin

Standalone EBITDA margin stood at 13.56% in FY25, a marginal decrease from 13.95% in FY24 due to increased manufacturing expenses. However, absolute EBITDA grew 27.35% YoY from INR 20.62 Cr to INR 26.26 Cr, reflecting stronger core operational scale.

Capital Expenditure

As of September 30, 2025, Capital Work-in-Progress (CWIP) stood at INR 5.02 Cr (up from INR 3.79 Cr in March 2025). Intangible assets under development were recorded at INR 8.45 Cr, indicating ongoing investment in product development and R&D.

Credit Rating & Borrowing

Infomerics assigned a 'Stable' outlook based on healthy financial risk profiles. Interest costs decreased by 8.72% to INR 2.73 Cr in FY25. Debt protection is strong with an ISCR of 8.55x and DSCR of 5.67x as of March 31, 2025.

⚙️ Operational Drivers

Raw Materials

Steel is the primary raw material. Fluctuations in steel prices (e.g., a 30% increase) have historically impacted profit margins by approximately 15% when back-to-back procurement is not feasible.

Import Sources

Not specifically disclosed by country, though the company utilizes back-to-back arrangements with steel suppliers for PSU orders to mitigate price volatility.

Capacity Expansion

Current capacity in units is not disclosed; however, the company is expanding its product line with two new developed products awaiting clearances, which are expected to contribute to future top-line growth.

Raw Material Costs

Raw material costs are a significant driver; a 30% increase in raw material prices previously led to a 15% dent in profits. The company uses back-to-back arrangements for PSU orders (6-8 month lead times) but faces higher risk on private/export orders where such hedging is unavailable.

Manufacturing Efficiency

The company focuses on operational excellence and cost discipline; however, manufacturing expenses increased in FY25, causing a slight dip in the EBITDA margin from 13.95% to 13.56%.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

Growth will be achieved by expanding into global markets (Brazil, Venezuela), securing approvals for new R&D products, and shifting the product mix toward high-margin items like winches and connectors. The company aims for a long-term revenue target of INR 500-660 Cr with 20-25% PAT margins.

Products & Services

Oil drilling equipment including winches, connectors, gas lift equipment, stabilizers, and casing pipes with connectors.

Brand Portfolio

United Drilling Tools (UDTL).

New Products/Services

Two new products have been developed and are awaiting clearances; these are expected to be added to the top-line in the coming fiscal years.

Market Expansion

Targeting expansion in international markets, specifically mentioning recent significant orders from Brazil and Venezuela to diversify away from PSU dependency.

🌍 External Factors

Industry Trends

The industry is highly regulated with a shift toward advanced drilling technologies. UDTL is positioning itself by developing new high-tech products and expanding its global footprint to capture international demand.

Competitive Landscape

Faces competition from larger international firms; UDTL's smaller scale is a weakness, but its agility and niche product focus provide a competitive edge in specific tender categories.

Competitive Moat

The moat is built on 42 years of promoter experience and established relationships with PSUs. This is sustainable due to the high entry barriers of technical certifications and the custom-built nature of the engineering products.

Macro Economic Sensitivity

Highly sensitive to global crude oil prices and capital expenditure cycles in the oil and gas industry.

Consumer Behavior

Demand is driven by PSU drilling schedules; recent delays were noted as PSUs utilized existing stock post-COVID before resuming new procurement.

Geopolitical Risks

Operations in regions like Venezuela and Brazil introduce geopolitical and regulatory risks associated with international trade and oil sector stability.

⚖️ Regulatory & Governance

Industry Regulations

Subject to stringent quality assurance and testing by end customers (PSUs) and must comply with environmental and safety standards inherent in oil and gas equipment manufacturing.

Environmental Compliance

The company operates in a highly regulated industry with significant exposure to environmental and safety-related hazard regulations.

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility (steel) and crude oil price fluctuations are key uncertainties that can impact margins by 15% or more and disrupt order visibility.