India’s chemical industry is highly diversified, covering over 80,000 commercial products. It can be broadly categorised into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilizers.
Currently, India ranks as the sixth-largest producer of chemicals in the world and third in Asia, contributing 7 percent to the nation’s GDP.
India ranks as the fourth-largest producer of agrochemicals worldwide, following the United States, Japan, and China. India accounts for 16-18 percent of the world’s production of dyestuffs and dye intermediates.
The Indian chemical industry is currently valued at approximately $220 billion and is projected to grow to $300 billion by 2030 and $1 trillion by 2040. This growth is driven by rising domestic consumption and India’s strategic positioning as a global manufacturing hub due to geopolitical shifts, particularly the China-Plus-One strategy.
With a compound annual growth rate (CAGR) of 9.3 percent, the sector is well-aligned with India’s ambition to become a $30 trillion economy by 2047.
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Foreign direct investment (FDI) inflows in the chemicals sector (excluding fertilisers) reached $22.146 billion from April 2000 to March 2024.
Additionally, an estimated investment of Rs. 8 lakh crore (about $107.38 billion) is expected in the chemicals and petrochemicals sector by 2025.
Notably, Deepak Nitrite Limited is one of the chemical stocks that has witnessed consistent stake increases by the Life Insurance Corporation of India in recent years.
LIC shareholding
Life Insurance Corporation of India has increased its stake in Deepak Nitrite from 6.79 percent in June 2023 to 9.47 percent in June 2024, marking a significant increase of 2.68 percent in just one year. In comparison, LIC’s stake in the company was only 1.68 percent back in September 2021.
Stock Performance
With a market capitalisation of Rs. 38,445.8 crores, the shares of a leading chemical intermediates producer surged by nearly 1 percent on BSE to Rs. 2,848.15 during the morning trading session of Thursday.
The stock has delivered positive returns of nearly 27.4 percent of returns in one year, and around 34.2 percent of positive returns in the last six months.
So far in 2024, the shares of Deepak Nitrite have given positive returns of about 14 percent.
Financials
The company reported a significant growth in its revenue from operations, with a year-on-year rise of around 22.6 percent, rising from Rs. 1,768 crores in Q1 FY24 to Rs. 2,167 crores in Q1 FY25. This revenue growth was driven by an improved product mix, volume growth, and proactive efforts to target new territories and customers.
The Phenolics segment exhibited strong year-on-year revenue growth, supported by improved realisations due to robust demand and favorable spreads.
Similarly, its net profit increased during the same period from Rs. 150 crores to Rs. 203 crores, marking an increase of nearly 35.3 percent.
On a year-on-year basis, the Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA increased from Rs. 242 crores in Q1 FY24 to Rs. 328 crores in Q1 FY25, registering a growth of 36 percent.
This strong EBITDA performance was enhanced by operating leverage gains due to high plant utilisation and better volumes, despite facing logistical disruptions caused by elevated freight costs and vessel unavailability. A more favourable product mix further contributed to improved profitability.
About the Company
Deepak Nitrite Limited is a prominent chemical manufacturing company engaged in the business of manufacturing Basic Intermediates, Fine & Speciality Chemicals, Performance Products, and Phenolics.
The company is the largest producer of Phenol, Acetone, IPA & Sodium Nitrite in India, and has exported its products to over 45 countries across 6 continents.
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Written by Shivani Singh
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