Deepak Nitrite Q1 Review - Focus On Advance, High-Value Products Intensifies: Motilal Oswal
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Motilal Oswal Report
Deepak Nitrite Ltd. reported a beat on our estimates, driven by better-than-expected margins in phenolics and margins expansion in basic chemicals.
Deepak Nitrite's Ebit margin for the fine and specialty and performance products segments contracted.
Despite the huge beat on our estimate, we continue to highlight the risk of overall margin contraction from the normalisation of phenolics product prices.
As a result, we build in an Ebitda margin of 27% in FY22E (up from 26% earlier) and 26% for FY23/24E.
That said, strong domestic demand for phenolics, with higher exports to countries such as the U.S. and China, could keep product prices and margins strong in this segment – presenting an upside risk to our estimates.
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