South West Pinn. Q1 FY27 Earnings Call — Analysis (NSE: SOUTHWEST)
South West Pinnacle posts Q1FY27 consolidated revenue of ₹61.68 Cr (up 53.4% YoY) and PAT of ₹9.34 Cr (up 289.2% YoY), driven by the CBM gas monetization business, and guides for FY27 revenue of ₹285-300 Cr with 26-28% EBITDA margins.
The take
Q1FY27 Consolidated Revenue ₹61.68 Cr ( +53.4% YoY ) . Guidance cut .
Results
Consolidated revenue grew 53.4% YoY to ₹61.68 Cr with EBITDA of ₹15.6 Cr (margin 25.3%) and PAT of ₹9.34 Cr, driven by an 8x YoY jump in CBM gas segment revenue and a 289.2% YoY profit surge.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Consolidated Revenue | ₹61.68 Cr | +53.4% | yoy · Q1FY27 · vs Q1FY26 |
| Consolidated EBITDA | ₹15.6 Cr | none · Q1FY27 · derived from stated 25.3% OPM on ₹61.68 Cr revenue | |
| Consolidated EBITDA Margin | 25.3% | none · Q1FY27 · as stated on call | |
| Consolidated PAT | ₹9.34 Cr | +289.2% | yoy · Q1FY27 · vs Q1FY26 |
| CBM Gas Segment Revenue | ₹19.5 Cr | +~8x | yoy · Q1FY27 · vs Q1FY26 |
| Drilling & Exploration Segment Revenue | ₹42 Cr | +5-6% | yoy · Q1FY27 · vs Q1FY26 |
| Net Debt | ₹28.5 Cr | point_in_time · Q1FY27 · as of end Q1FY27 | |
| Debt-to-Equity | 0.16x | point_in_time · Q1FY27 · as of end Q1FY27, post QIP | |
| FY27 Revenue Guidance | ₹285-300 Cr | none · FY27 · full year guidance given on Q1FY27 call | |
| FY27 EBITDA Margin Guidance | 26-28% | none · FY27 · full year guidance given on Q1FY27 call |
Guidance
Management guides for FY27 consolidated revenue of ₹285-300 Cr (over 5x YoY growth) with EBITDA margins of 26-28%, driven by CBM gas output ramping to 15,000 SCMD by Oct-Nov 2026 and further to 30,000 SCMD by Q4FY27.
Key themes
CBM gas monetization-led hypergrowth and margin expansion
How the narrative shifted
- Exploration super cycle driven by national resource security: No mention.
- Private-sector order mix improving cash flows: No mention.
- Coal block as future value-creation engine: No mention.
- Fleet expansion and capacity ahead of demand: No mention.
- Operational leverage and margin expansion: No mention.
- International optionality via Oman joint ventures: No mention.
- Government policy tailwinds for CBM and aquifer mapping: No mention.
Operational commentary
- Total CBM gas production doubled QoQ to ~4,800 SCMD average in Q1; run-rate reached 7,000 SCMD by end of Q1 and is currently ~9,000 SCMD.
- CBM gas offtake began under the 5-year Gas Sales Agreement at a floor price of ~$7.3/MMBtu linked to 13.5% of Brent crude.
- CBM gas segment EBITDA margins stood at ~62% in Q1; expected to moderate to 55-60% as production scales to 30,000 SCMD.
- One more drilling rig is being deployed to commence Phase-1 development drilling across 55 wells at the CBM block; target spud by Oct-Nov 2026.
- QIP of ₹161 Cr completed; ₹75 Cr earmarked for CBM CapEx, ₹40-50 Cr for drilling services fleet expansion, balance for working capital.
- Drilling segment mineral and hydro-geological divisions remained stable; energy services (shale gas, geothermal, CBM core drilling) added new contracts with ONGC, Oil India, and Singareni Collieries across Assam, Gujarat, Jharkhand, and Rajasthan.
- Company won two large tenders from NMDC and BCCL worth ₹178 Cr (mineral drilling) and ₹40 Cr (coal coring) respectively; total outstanding L1/L2 pipeline estimated at ₹400-500 Cr.
- Order book across drilling services stands at ₹317 Cr (non-CBM), with ~45% expected to convert in FY27.
Analyst Q&A
Q. What drove the elevated 62% EBITDA margin in the CBM gas segment, and is it sustainable as production scales?
The 62% margin is not an ongoing number; Q1 reflected initial wellhead maintenance economics where opex was exceptionally low. At full-field development of 30,000 SCMD, EBITDA margin should normalise to 55-60%.
Q. Can you break down the ₹285-300 Cr FY27 revenue guidance between CBM gas and drilling services?
CBM gas segment is expected to contribute ₹175-180 Cr in FY27, while drilling services should deliver ₹110-115 Cr.
Q. Why has the drilling services segment been growing only 5-6% when the company talks about a ₹400-500 Cr tender pipeline?
The L1/L2 conversion should reflect in H2FY27 execution; Q1 drilling services growth was subdued because a few large contracts had completion phases that temporarily reduced billing, but the order book and pipeline remain robust at ₹317 Cr.
Q. Can you provide the exact Brent crude assumption for your revenue model and the CBM floor price?
The floor price is $7.3/MMBtu linked to 13.5% of Brent; at current Brent of $65-70/bbl, the realised price is $8.5-9/MMBtu. Management models conservatively at $8/MMBtu for FY27.
Q. What about HNGL/propane economics from the CBM block — can you update on offtake?
HNGL extraction requires a minimum of 30,000 SCMD of gas throughput. The company is in advanced discussions with an offtake partner; an announcement is expected in Q2FY27.
Research and educational content only. Not investment advice.