Deepak Fertilisers, Godawari Power dip 5% after surging up to 54% in 9 days

Shares of Deepak Fertilisers & Petrochemicals Corporation and Godawari Power & Ispat were locked in 5 per cent lower circuit at the bourses on Friday, with only sellers seen on these counters after the shift to T-to-T group.

These stocks had witnessed a strong run-up in the past two weeks, rallying up to 54 per cent in nine trading days. In comparison, the S&P BSE Sensex was down 0.28 per cent during the same period.

With effect from today, on surveillance measures, these stocks are trading under ‘T’ group on the BSE and ‘BE’ segment on the National Stock Exchange (NSE). Shares falling in the Trade-to-Trade or T-segment are traded in BE series and no intraday is allowed. This means trades can only be settled by accepting or giving the delivery of shares.

Deepak Fertilisers & Petrochemicals Corporation was down 5 per cent at Rs 430.20 on the BSE. A combined 137,000 shares have changed hands, so far, and there were pending sell orders for around 210,000 shares on the NSE and BSE. The stock of the commodity chemicals company had rallied 54 per cent in the past nine trading days. It hit a 52-week high of Rs 474.65 on June 15, 2021 after rating agency ICRA upgraded in the short-term rating notes the improvement Deepak Fertilisers & Petrochemicals Corporation (DFPCL) liquidity profile on a consolidated basis.

For the January-March quarter (Q4FY21), DFPCL reported five-fold jump in consolidated net profit at Rs 116 crore against Rs 23 crore in Q4FY20. The company’s operating revenue grew 21.8 per cent year-on-year (YoY) at Rs 1,575 crore from Rs 1,293 crore in a year ago quarter. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins improved 809 basis points (bps) to 17.3 per cent from 9.2 per cent.

The company said the demand for LDAN improved in Q4FY21 inline with the improvement seen in the demand for cement and steel related sector in the domestic market. The global specialty chemical value chains moving from China to India boosting nitric acid demand and prices in India, it said.

“DFPCL has a strong market position in the existing chemical businesses of TAN, Nitric acids and IPA. It is one of the leading players of TAN in the domestic market supported by the superior quality product offering in the form of Low Density AN (LDAN), which commands a premium over AN-melt manufactured by domestic players and the imported fertiliser grade AN. The company is among the only two producers of IPA in the domestic market and caters to around 65 per cent of the market demand through its manufacturing capacity. DFPCL is also the leading manufacturer of concentrated nitric acid (CNA) in the domestic market. It is expanding its capacities in TAN, which would allow it to maintain its dominant position over a longer term,” ICRA said in rating rationale.

Shares of Godawari Power & Ispat, too, were locked in 5 per cent lower circuit of Rs 1,326 on Friday, after surging 45 per cent in the past nine trading days, till Thursday. The stock of the company, engaged in steel products business, had hit a record high of Rs 1,561.95 on June 15, 2021.

For Q4FY21, Godawari Power & Ispat posted a multifold jump in consolidated net profit at Rs 304 crore, mainly on the back of higher revenues. It had a profit of Rs 34.22 crore in the year-ago quarter. The company’s total income rose 60 per cent year on year to Rs 1,264 crore in the quarter from Rs 788 crore in the same period a year ago.

The company said its board has also approved a proposal to set up of a captive Solar PV power plant of 250 MW capacity in Raigarh District of Chhattisgarh with a cost envisaged at Rs 750 crore. The project shall be funded mainly out of internal accruals. The power generated in this project shall be captively consumed in the company's existing plant situated at Silatra Industrial Area, Raipur, Chhattisgarh, it said.

From the perspective of making a strategic investment and acquisition of distressed assets available in the steel and metal sector, the board also given its approval for utilization of its surplus funds upto Rs 200 crore to invest/grant loan/inter-corporate deposit or in any other form to asset reconstruction companies, distressed asset funds and/or other bodies corporate.