Deepak Nitrite rises 9%, hits 52-week high; stock up over 100% in CY20

The latest rally in the stock came after the DGTR recommended imposing provisional anti-dumping duty on phenol imports from Thailand and the United States

Shares of Deepak Nitrite extended their winning run and gained 9 per cent to a fresh 52-week high of Rs 825 on the BSE on Tuesday. The stock had already risen 18.5 per cent in the last two sessions as compared to Sensex's 1.5 per cent gain during the same period.

At 11:46 AM, the stock had pared the day's gain and was trading 1.68 per cent lower at Rs 743.35. Around 58.13 lakh shares have changed hands on the NSE and BSE so far.

The chemical maker's stock has more than doubled in stock price from the beginning of the year. The stock had risen from Rs 375.20 to Rs 756.05 (till Monday, August 24) gaining 101.5 per cent in that period. In comparison, the benchmark S&P BSE Sensex has returned -6.06 per cent in the same time frame.

The latest rally in the stock came after the Directorate General of Trade Remedies (DGTR), on August 20, recommended imposing provisional anti-dumping duty on phenol imports from Thailand and the United States. According to reports, Deepak Phenolics, Hindustan Organics and SI Group had approached DGTR complaining that they had to sell phenol below cost of production due to rise in imports India imports around $600 million worth of phenol every year.  

"..the Authority provisionally concludes that: a. The subject goods have been exported to India from the subject countries at dumped prices. The Domestic Industry has suffered material injury. The material injury suffered by the Domestic Industry has been caused by the dumped imports," DGTR said.

"the Authority is of the view that imposition of provisional duty is required to offset dumping and injury, pending completion of the investigation. Therefore, the Authority considers it necessary and recommends imposition of provisional ADD on imports of

subject goods from the subject countries," it said.

For the June quarter of 2020-21 (FY21), Deepak Nitrite's standalone revenues de-grew by 36 per cent year-on-year (YoY) to Rs 355 crore. The company attributed the dip to nationwide lockdown caused by Covid19 pandemic, saying "effective capacity utilisation in the quarter was around 65 per cent,". Net profit dipped 40.7 per cent YoY to Rs 63.61 crore.

Standalone earnings before interest, tax, depreciation, and ammortisation (Ebitda) came in at Rs. 102 crore, lower by 46 per cent YoY as against Rs. 188 crore in the corresponding period last year. "Within the segments, the PP segment witnessed lower EBITDA margin as one of the chemical intermediates - DASDA, which enjoyed an extraordinary run up in prices during last year witnessed demand drop in end-use segments i.e. paper and textiles owing to Covid-19," the company said.

In a post-result update, Edelweiss said that although the company's Q1FY21 performance was impacted by the lockdown, profitability remained robust in most business segments. 

"DEN will continue to remain resilient given its focus on growth and forward integration (demonstrated by land acquisition for future capex) and a diversified business mix. Capex budget was guided at Rs 200 crore each for DEN (debottlenecking with a focus on products in the pharma, agrochemical and personal care segments) and DPL. We expect an improvement in FSC and DPL’s profitability to offset impact of lower demand in the PP segment. Accounting for these factors, we revise our FY21/22 EPS estimates upwards to Rs 39.9/47.1, respectively. We maintain our BUY rating with a revised target price of Rs 660 per share, valuing the company at 14x FY22E earnings," it said.