The shares of the leading chemical companies gained up to 4 percent after the company’s subsidiary undertook a project for manufacturing Polycarbonate Resins (‘PC’) with an investment of around Rs 5,000 crores.
With a market capitalization of Rs 35,378.31 crore, the shares of Deepak Nitrite Ltd were trading at Rs 2,598.70 per share, increasing around 4 percent as compared to the previous closing price of Rs 2,500.55 apiece.
Reason for rise:-
The shares of the company have seen bullish movement after Deepak Chem Tech Limited (‘DCTL’) a wholly owned material subsidiary of Deepak Nitrite Limited, entered into agreements with Trinseo Deutschland Antagengesettschaft mbH and Trinseo Europe GmbH for the acquisition of Polycarbonate Resins (‘PC’) manufacturing assets and technology license, respectively.
Moreover, the purpose of the Agreements is to acquire a PC technology license from Trinseo, as well as Trinseo’s PC manufacturing assets, including proprietary equipment, located in Stade, Germany, which will be relocated to India and set up at Dahej, allowing DCTL to undertake the project for manufacturing Polycarbonate Resins, as approved by the Board of Directors.
Financial Performance:-
Recently, the company announced its financial performance in which revenue magnified by 14 percent on a year-on-year basis from Rs 1,778 crore in Q2FY24 to Rs 2,032 crore in Q2FY25. However, on a quarter-on-quarter basis, revenue decreased by 6 percent from Rs 2,167 crore in Q1FY25 to Rs 2,032 crore in Q2Y25.
Moreover, net profit plummeted by 5 percent on a yearly basis from Rs 205 crore in Q2FY24 to Rs 194 crore in Q2FY25, meanwhile, on a quarter-on-quarter basis, net profit dipped time by 4.4 percent from Rs 203 crore in Q1FY25 to Rs 194 crore in Q2FY25.
Market Dynamic:-
The global chemical industry faces challenges due to cautious customer sentiment and inventory destocking in China. However, early signs suggest improving volumes and sentiment, with recovery expected in Q3 FY25. Strong demand for phenolics boosted revenue from this segment by 37%, aiding overall industry resilience.
Capex Plan:-
The company has committed to a ₹14,000 crore investment plan, with key projects nearing completion, including MIBK, nitric acid, and specialty chemicals, with ₹2,000 crore set for commissioning this year. Additionally, a new R&D center in Vadodara will boost innovation, expected to be ready by FY25-end.
Margin Guidance:-
Margins in the Advanced Intermediates segment face pressure from pricing challenges, especially in export markets. To counter this, management is prioritizing operational efficiency and refining the product mix to navigate current market conditions and sustain profitability.
Challenges:-
The company faces soft agrochemical demand, anticipated to recover by late FY25, while dyes, pigments, and home care sectors show improvement. The impact of Bangladesh’s crisis is still uncertain. Management remains optimistic for demand recovery and better product realizations by year-end, aided by government initiatives and infrastructure investments.
Company profile:-
Deepak Nitrite Limited is engaged in the manufacturing and trading of chemicals. The Company operates through two segments: Advanced Intermediates and Phenolics. Its Advanced Intermediates segment offers sodium nitrite, sodium nitrate, nitrotoluidines, fuel additives, nitrosyl sulphuric acid, xylidines, etc.
Written by:- Abhishek Singh
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