A leading chemical stock came under pressure, slipping nearly 4 percent in today’s trade after brokerage firm Motilal Oswal downgraded its rating. The revision reflects concerns over near-term growth prospects and valuation challenges.
During Friday’s trading session, Deepak Nitrite Ltd‘s share price hit an intraday low of Rs.2,021.00 apiece, falling nearly 4 percent from its previous close of Rs.2,100.40 apiece. The share has retreated slightly and is trading at Rs.2,024.00 per share. Over the last five years, the shares have delivered over 300 percent returns.
Brokerage Outlook
Motilal Oswal has downgraded Deepak Nitrite Ltd to a ‘Sell’ rating, assigning a target price of Rs.1,650 per share, indicating a 20 percent downside from the current level. The brokerage cited expensive valuations as a key concern, stating that the current pricing appears unjustified for a commodity chemicals company operating in a cyclical industry.
Highlighting concerns over recent underperformance and weak forward guidance, Motilal Oswal has also revised its financial projections downward. It has slashed its EBITDA and EPS estimates for FY26 by 10 percent and 8 percent, respectively. For FY27, the brokerage cut its EBITDA forecast by 12 percent and EPS by 11 percent.
Despite projecting EBITDA margins of 14.9 percent for FY26 and 15.6 percent for FY27, the brokerage cautioned that further downside risks remain. It noted that the estimates are vulnerable to additional revisions if the company’s operational recovery does not gain momentum.
Deepak Nitrite is progressing steadily with its ongoing projects across multiple facilities. The Nitric Acid project has entered the pre-commissioning phase and is expected to be commissioned by the end of the current quarter. Similarly, the MIBK/MIBC project has completed all engineering and procurement activities and is on track for commissioning in the first half of FY26.
In addition, the company plans to commission its nitration and hydrogenation plants in the second half of FY25, following the successful commissioning of the fluorination block in Q4 FY24. The Acetophenone project is also scheduled for commissioning within H1 FY26. Meanwhile, the R&D Centre at Savli, Vadodara, which has a projected capital expenditure of Rs.115 crore, is nearing completion.
Financial Performance
In Q4 FY25, the company reported revenue of Rs.673.43 crore, marking a 2.19 percent year-on-year decline from Rs.688.51 crore in Q4 FY24. However, on a sequential basis, revenue increased by 20.41 percent from Rs.559.27 crore in Q3 FY25, reflecting improved operational traction.
Net profit for Q4 FY25 stood at Rs.53.87 crore, down 53.44 percent from Rs.115.68 crore in the same quarter last year. Sequentially, however, net profit surged by 212.32 percent from Rs.17.25 crore in Q3 FY25, indicating a strong recovery.
For the full year FY25, the company posted total revenue of Rs.2,675.66 crore, reflecting a 6.05 percent year-on-year decline from Rs.2,848.05 crore in FY24. Annual net profit also declined by 36.21 percent to Rs.276.43 crore, compared to Rs.433.43 crore in the previous year.
Written by – Siddesh S Raskar
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the autho
