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LIC increases its stake in this chemical stock and analysts see an upside of 42% 

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The shares of Deepak Nitrite Limited had gained approximately 2 per cent and were trading at Rs 2,045 levels in the afternoon on Friday. In the past three months, the stock has gained approximately 18 per cent. 

Life Insurance Corporation on Thursday announced that it has increased its holding from 67,88,327 to 68,58,414 equity shares, increasing its stake from 4.977 per cent to 5.028 per cent. The shares were bought at Rs 2074.49 per piece through open market operations. 

JM Financial has a ‘Buy’ call on Deepak Nitrite with a target price of Rs 2,895 which represents an upside of 42% from the current levels. 

The sharp correction in propylene prices due to lacklustre downstream demand for propylene derivatives, the decline in benzene prices, driven by the drop in crude prices, and the rise in phenol prices, led by an increase in downstream demand and supply shortages of Bisphenol-A (BPA) (especially in China) will positively affect the company, the brokerage highlighted. 

In Q1FY23, the company reported a total income of Rs 2,057 crores up from Rs 1,526 crores in the same quarter a year earlier. In the previous quarter, their revenue stood at Rs 1,872 crores. 

In the period, their net profit stood at Rs 234 crores which declined from Rs 302 crores in Q1FY22. In the March quarter, their profit stood at Rs 267 crores. 

Deepak Nitrite is a chemical manufacturing company. It is a leading manufacturer of organic, inorganic, fine, and specialty chemicals. It has a 70% market share in sodium nitrite, sodium nitrate, and NitroToluenes in India. 

The company has a market capitalization of Rs 27,880 crores and a dividend yield of 0.34% as of September 30th, 2022. The TTM PE of the company is 27.94 while the industry average is 41.18 which represents that the company is undervalued. 

Written by Anoushka Roy


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