Deepak Nitrite inches towards record high; zooms 42% from June low

Shares of Deepak Nitrite (DNL) hit an over two-year high of Rs 2,862.90, gaining 3 per cent on the BSE in Monday's intraday trade, in an otherwise subdued market, on improved business outlook. The stock of the specialty chemicals company has zoomed 42 per cent from its previous month's low of Rs 2,023 touched on June 4.

Currently, Deepak Nitrite is quoting at its highest level since October 2021. Deepak Nitrite stock is near its record high level of Rs 3,020, touched on October 19, 2021.

Deepak Nitrite has a leading market position in most of its products in the domestic and global markets. The company has a portfolio of over 100 products, broadly divided into two segments—advanced intermediates and phenolics.

 

The global chemical industry surged to $6 trillion in 2023, despite several challenges. It is poised for robust demand ahead, driven by products supporting the energy transition and bolstered by the Government's policies. The sector's evolution towards sustainable solutions aligns with global environmental goals.

India’s chemical sector is pivotal to the economy, contributing approximately 7 per cent to GDP and ranking as the sixth-largest producer globally. It is projected to reach $304 billion by 2025 at a CAGR of 9.3 per cent, benefiting from increasing domestic consumption and demand across diverse industries.

Government initiatives like ‘Aatmanirbhar Bharat’ and ‘Make in India’ aim to reduce import dependence and bolster domestic manufacturing, further strengthening the sector’s growth trajectory, Deepak Nitrite had said in its FY24 annual report.

Looking ahead, India’s chemical sector offers immense growth potential. The company’s focus on the operational excellence, byproduct valorisation, and strategic investments positions it well to capitalise on emerging opportunities in India and global markets. With a vision for integrated operations and foray in high-value speciality products, the company is poised to lead amidst industry challenges, driving ambitious growth strategies in the years ahead, the management said.

On July 7, 2024, ICRA reaffirmed the long and term rating of Deepak Nitrite in respect of enhanced bank facilities aggregating to Rs 1,402 crore of Deepak Chem Tech Limited (DCTL), a wholly owned subsidiary of the company. The outlook on the long-term rating is 'Stable'.

"DCTL has signed a Rs  9,000-crore memorandum of understanding (MoU) with the Government of Gujarat on January 31, 2024, adding to the previous MoU worth Rs  5,000 crore as on May 23, 2023, for capacity expansion of some existing products, new  product, backward, and forward integration and cost saving measures.

However, the capex comprises several smaller projects (under rated  entities/subsidiaries/JV), with the execution phased over the  next several years, which will mitigate the risk to some extent. Also, the Group is executing projects worth around Rs 2,000  crore (part of MoU worth Rs 5,000 crore), of which majority will get commissioned by December, 2024.