Deepak Nitrite Q3 Review - Strong Volumes In Phenolics; Multiple Projects Under Commissioning: Centrum Broking

Centrum Broking Report

Deepak Nitrite Ltd. reported flattish sequential operating performance backed by volume growth in phenolics while advanced intermediates margins remained subdued due to mixed user segments demand.

Deepak Nitrite’s revenues surged 13% QoQ at Rs 20.1 billion in Q3, Ebitda grew marginally by 0.8% at Rs 3.0 billion, and profit after tax declined 1.5% at Rs 2.0 billion. Quarterly Phenol production stood highest ever at 88,378 million tonne implying annualised Phenolics plant capacity at ~350,000 mt.

Although Advanced Intermediates volumes jumped YoY, realisations remained under pressure due to muted demand recovery from agrochemicals, textiles, dyes and pigments.

Deepak Nitrite signed Rs 90 billion MOU with Gujarat government for three new products taking aggregate investment to Rs 140 billion and project completions by 2027.

With a net debt free status and healthy cash flows, Deepak is well placed to go ahead with its huge investment plan. Based on nine months performance, we have maintained our FY24E Ebitda estimates while lowering our Ebitda estimates for FY25E/FY26E by 7.4%/0.6%.

We maintain Add rating with a revised SOTP-based target price of Rs 2,347 (earlier Rs 2,282).

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