Deepak Nitrite’s Q1FY23 outcomes had been impacted by a hearth incident at Nandesari, Gujarat. Although EBITDA/PAT had been down 22% every YoY, administration stays assured about medium to long-term development given the resumption in plant operations and aggressive capex plan of round ₹15 bn in FY23E, highlighted brokerage Edelweiss.
The brokerage home believes that Deepak Nitrite’s opportune entry into phenol and now aggressive enlargement plan in phenol/acetone derivatives affords robust development alternative pushed by import alternative. As capex commissioning begins from Q3FY23E, it expects earnings development momentum to choose up in H2FY23E.
Edelweiss has retained its ‘BUY’ ranking on the specialty chemical inventory with a goal value of ₹3,127 per share, implying a possible upside of over 50% from present inventory degree. Deepak Nitrite shares are down about 20% in 2022 (YTD) to date.
Pushed by robust realisation, the chemical producer’s income development was 36% YoY whereas EBITDA/PAT had been down by 22%, every (above estimates). Regardless of a contraction in unfold, the phenol enterprise maintained profitability on a sequential foundation, the brokerage had highlighted in earlier observe on Q1 outcomes.
Deepa Nitrite has an aggressive development capex of ₹15 bn for FY23, aiming to extend capability upfront intermediate and phenol derivatives. It’s planning to enter solvents manufacturing, submit graduation of the phenol derivatives plant.
Within the AGM, administration guided for import alternative of various polycarbonates. Edelweiss believes, its entry into the worth added section of phenol might be a key optimistic in transitioning from a commodity participant to a specialty producer. Scale-up in advantageous and specialty enterprise can be more likely to preserve margins in optimistic trajectory.
The corporate might be organising manufacturing models for solvents corresponding to MIBC and MIBK. It’s seeking to broaden the phenol manufacturing via de-bottlenecking actions. Administration plans to extend general phenol manufacturing to 0.3mn tones by FY24E.
Deepak Nitrite has finalized three new merchandise that are import alternative merchandise used throughout fuel liquid advanced reactions. The corporate expects to derive 20-30% type of EBITDA on these molecules.
The views and suggestions made above are these of particular person analysts or broking firms, and never of Mint.
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