Synopsis:
A leading chemical manufacturer is navigating industry challenges through innovation, sustainability, and major capacity expansion plans, positioning itself as a strong long-term value pick for investors.
The chemical industry in India is going through a period of change. The industry is dealing with issues such as rising raw material costs, strict environmental rules, and disruptions in global supply chains.
To handle these challenges, companies are focusing more on innovation, sustainability, and efficiency. Once upon a time, this sector gave handsome returns to the investors, one of them was Deepak Nitrite Limited.
Company Overview
Deepak Nitrite Limited is one of India’s leading chemical intermediate producers that makes specialty chemical products used in many industries. It focuses on three main areas: basic chemicals, fine and specialty chemicals, and performance products. The company has factories in Gujarat, Maharashtra, and Telangana.
The company has a market capitalization of Rs.24,572.57 crore, with its shares trading at 1,801.60, down by 0.04 percent from the previous day’s closing price of Rs.1,802.30.
In FY25, the company’s revenue was Rs.8,282 crore, higher than Rs.7,682 crore in FY24, and the 5-year revenue CAGR is 14 percent. The net profit decreased to Rs. 697 crore from Rs.811 crore for the same period, and the 5-year net profit CAGR is 2 percent.
In Q1FY26, revenue from operations fell to Rs.1,890 crore compared to Rs. 2,167 crore in Q1FY25, while net profit fell to Rs.112 crore from Rs.203 crore a year earlier. Due to continued headwinds in agrochemical intermediates and pricing in pressure from China.
For Q1FY26, EBITDA increased 11 percent compared to the previous quarter, reaching Rs.197 crore.The company has reported a return on equity of 13.4 percent. Its P/E ratio stands at 40.58, which the industry average of 34.16.
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Future Plans
On the other hand, the company plans to get 60 percent to 70 percent of its energy from renewable sources by FY27. They have signed a power purchase agreement, which is expected to lower energy costs from May 2026 and cut carbon emissions by 60 percent to 65 percent.
The company is investing over Rs.100 crore in a new R&D centre in Vadodara to develop products and improve processes in Life Sciences and Specialty Chemicals. It is also adopting digital technologies such as smart power management and predictive analytics to make operations more efficient and reduce energy use.
Capex Plan
The company confirmed its Rs.10,000 crore investment over three years, with major integration projects. Management remains optimistic, emphasizing continued cost management, focus on innovation, and strong resilience against geopolitical challenges such as US tariffs.
An investment of Rs.8,500 crore is planned for India’s first integrated polycarbonate plant, with a capacity of 1,65,000 metric tonnes per year, which is expected to start operations by FY 2028.
Deepak Nitrite stands out as a resilient player in India’s chemical industry, balancing challenges with strategic investments in R&D, renewable energy, and large-scale capacity expansion. While near-term pressures persist, its long-term focus on innovation, sustainability, and integration makes it an attractive pick for value investors seeking steady growth potential.
Written By Jhanavi Sivakumar
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