Deepak Fertilisers hits record high on strong Q2; zooms 149% from June low

Deepak Fertilisers and Petrochemicals share price: The company's consolidated net profit more-than-doubled to Rs 214 crore in Q2 FY25

Deepak Fertilisers & Petrochemicals Corporation (DFPCL) share price hit a record high of Rs 1,330, surging 17.6 per cent on the BSE in Tuesday's intraday trade. The stock ended 9.11 per cent higher at Rs 1233.65 per share after the company's consolidated net profit more-than-doubled to Rs 214 crore for the second quarter ended September 2024 (Q2 FY25), on healthy volume growth. By comparison, the BSE Sensex ended 0.45 per cent higher.

 

Deepak Fertilisers and Petrochem had posted a net profit of Rs 63 crore in the year-ago quarter (Q2 FY24). On a sequential basis, profit grew 7 per cent from Rs 200 crore in Q1 FY25.

 

 

The stock surpassed its previous high of Rs 1,163.75, touched on October 3, 2024. It has zoomed 149 per cent from its June low of Rs 500.85.

 

Operating revenue grew 13 per cent year-on-year (Y-o-Y) and 20 per cent quarter-on-quarter (Q-o-Q) at Rs 2,747 crore. The company achieved an 83 per cent Y-o-Y increase in sales volume of manufactured bulk fertiliser, marking the highest sales in a quarter. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin improved to 18 per cent compared to 12 per cent in the year-ago quarter.

 

The impressive revenue growth was primarily driven by the Crop Nutrition business, which experienced an 18 per cent Y-o-Y increase in revenue, while the Chemical business grew by 8 per cent Y-o-Y despite a lean quarter for the chemical sectors. Fertiliser and Chemical businesses acted as a natural hedge, enabling the company to deliver consistent and improved performance.

 

DFPCL is among India's leading manufacturers of industrial chemicals and fertilisers. The group mainly operates in three verticals - industrial chemicals, crop nutrition (fertilisers) and technical ammonium nitrate (mining chemical).

 

The company has a diversified product range, broadly comprising industrial chemicals (IC), technical ammonium nitrate (TAN) and complex fertilisers. DFPCL holds a market leadership position in TAN and key IC products such as nitric acid, isopropyl alcohol (IPA). Further, commissioning of the ammonia project during fiscal 2024 has led to a healthy backward integration as ammonia is a key raw material for production IC, fertilisers, and TAN.

 

As India continues to grow, the chemical and fertiliser sectors are poised to thrive. The demand outlook for the Crop Nutrition, Mining Chemicals, and Industrial Chemicals Business is well aligned with India's growth story, providing strong and positive tailwinds, the management said. The company said it is actively working on the execution of the TAN Project and the Nitric Acid Project in Gopalpur and Dahej, respectively, to capitalise on future growth.

 

On the business outlook of the industrial chemicals segment, for Nitric Acid, the demand and margins are expected to be stable over the next few quarters. Propylene-based IPA demand and margins are expected to be stable and improve following the implementation of the ADD on Chinese suppliers over a few quarters, the company said.

 

The mining and infrastructure is expected to pick up post monsoon as demand for Power (Coal), Cement & Steel is expected to increase thereby providing robust support for TAN demand.

 

Above-normal monsoon rainfall in the company's core states has significantly enhanced groundwater table as well as water reservoirs for irrigation, which will help promising Rabi season ahead. The management expects the acreages under Rabi cash crops to go up especially for Sugarcane, Onion, and Potato etc.

 

Meanwhile, investor Mukul Mahavir Agrawal purchased 1.5 million equity shares, representing 1.2 per cent stake of DFPCL, in the July to September 2024 quarter, according to the shareholding pattern filed by the company. Mukul Agrawal held NIL shareholding at the end of June 2024 quarter, data shows.