Deepak Nitrite - Optimistic About Future Opportunities: Motilal Oswal

Motilal Oswal Report

Deepak Nitrite Ltd. is investing Rs 22 billion in integration projects, including MIBK/MIBC and Photochlorination plants, set for phased commissioning by FY25. It has also committed Rs 140 billion through Deepak Chem Tech to expand into specialty chemicals and polymers, aiming for market leadership in India.

Deepak Nitrite is also optimising processes, shifting to high-margin products, and improving efficiency to boost profitability. Cost reduction, backward integration, and a supply deal with Petronet LNG would ensure a steady supply of raw materials and cut logistics emissions by 75%.

It aims to become the largest player in solvents with a focus on import substitution and is pursuing aggressive integration to de-risk and diversify its business.

We believe the current valuation at ~39 times FY26E EPS seems expensive for a commodity chemical company, hence we maintain our Neutral rating with a target price of Rs 3,060.

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