The shares of one of the leading manufacturers of specialty chemicals rose to 4.5 percent to Rs 2,392 per share after its subsidiary inked a long-term deal with Petronet LNG Limited to receive Propylene and hydrogen.
Deepak Phenolics Limited (‘DPL’), a wholly-owned subsidiary of Deepak Nitrite Limited has entered a binding term sheet with Petronet LNG Limited (PLL), to receive 250 KTPA of Propylene and 11 KTPA of Hydrogen from the latter’s petrochemical plant in Gujarat.
The agreement spans 15 years from the date of the first supply of Propylene and Hydrogen by Petronet LNG Limited to Deepak Phenolics Limited. As the company stated in an exchange filing.
Deepak Nitrite shares have gained a 5.5 percent return in the last six months and 13 percent in a year.
The company incurred Rs 175 crore capex in FY22 to add new products, expand the capacity of the existing products, and for backward integration.
The company is expected to incur around Rs. 2,500- 2,600 crore capex over FY24 to FY26 for regular maintenance, backward integration, and expansion of its existing products.
The company’s domestic Revenues for FY 2022-23 stood at Rs 6,410 Crores compared to Rs 5,272 Crores in FY 2021-22. Revenue contribution from Exports stood at R 1,562 Crores, up by 2 percent when compared to Rs 1,530 Crores in the previous financial year.
The company’s marquee clients include ITC Limited, Indian Oil, Sun Pharmaceuticals Ltd, Lupin, Upl and many more.The company exports its products to over 45 countries.
Deepak Nitrite is a dominant player with a 70 percent domestic market share for basic intermediate sodium nitrate/ nitrite. Its subsidiary, Deepak Phenolics, similarly commands over 56 percent of the market share for Phenol, Acetone & IPA.
The company’s revenue has decreased by 9.3 percent yearly, from Rs 1,962 crore in Q2FY22 to Rs 1,778 crore in Q2FY23. During the same timeframe, Net profit has risen by 18 percent from Rs 174 crore to Rs 205 crore.
In FY 22-23. The company accounted for 26 percent of revenue from Asian markets, Europe accounted for 50 percent and the US accounted for 20 percent of revenue.
Deepak Nitrite Ltd manufactures Basic Intermediates, Fine and specialty Chemicals, Performance Products, and Phenolics. The company has a portfolio of over 100 products, divided into two segments viz. Advanced intermediates and Phenolics segment.
Written by Omkar Chitnis
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