Deepak Nitrite Stock Hits A Record High On Above-Estimated Results, Bullish Outlook
Shares of Deepak Nitrite Ltd. jumped to a record high after revenue and profit of the specialty chemical maker beat estimates in the third quarter, aided by its domestic business.
The company’s net profit rose 38% over the year earlier to Rs 216.6 crore in the three months ended December, according to an exchange filing. That compares with the be Rs 193.6-crore consensus estimate of analysts tracked by Bloomberg.
Its overall revenue increased 10% year-on-year to Rs 1,234.7 crore, beating the Rs 1,099.5-crore forecast.
That was led by the film and specialty chemicals, and phenolics businesses. While revenue from the phenolics business rose 40% to Rs 747 crore, film and specialty chemicals saw 22% growth over the year earlier.
- Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 30% to Rs 335 crore, against the projected Rs 309.9 crore.
- Ebitda margin expanded 400 basis points year-on-year to 27.1%.
The company attributed the growth of India’s manufacturing sector to the government’s successful vaccine diplomacy. “The immediate impact will be the continued shift from China to India for manufacture of chemicals, which is already evident and which holds potential for further acceleration in the upcoming quarters,” the company said in its investor presentation. “India is already a lucrative market for the chemical industry and Deepak Nitrite is an ideal aspirant to ride on the India chemical manufacturing theme alongside its diversified product mix.”
Highlights From Management Commentary:
- Oil & dye industry are still recovering from the impact of the pandemic.
- The entire basket of products, including new ones catering to pharma and personal care industries, continues to perform well with favourable price trends.
- Due to lingering effects of lockdown on end-user industries of paper, textiles and detergents, realisations in the performance products segment are yet to recover. However, the plant capacity utilisation and customer demand are steadily nearing the pre-Covid levels.
- Utilisation of phenolics segment during the quarter was above 115%.
- Domestic revenue rose 31% on a sequential basis to Rs 864 crore, while exports rose 12.9% over the previous quarter.
- The company is witnessing encouraging demand scenario across several end-user industries, and that is expected to continue.
- Brownfield expansion at Nadesari plant, along with other downstream products in the phenolics business, also contribute to the strong outlook.
Shares of Deepak Nitrite gained as much as 11.6% in early trade on Monday to Rs 1,240 apiece. All the seven analysts tracking the company recommend a ‘buy’, according to Bloomberg data. The stock crossed its 12-month consensus price target of Rs 1,225 on Monday.