Shares of this fertilizer stock jumped approximately 7 percent in Tuesday’s trading session after the company signed a long-term contract with a Norwegian Giant for Liquefied Natural Gas (LNG).
With a market capitalization of Rs 6,684.29 crores, the stocks of Deepak Fertilisers & Petrochemicals Corporation Limited (DFPCL), one of India’s leading producers of industrial chemicals and fertilisers, started their trading session on Tuesday at Rs 518.65 and currently trade at Rs 529.50, gaining around 7 percent compared to the previous closing levels of Rs 494.40 apiece.
Such sharp stock price movements are observed today after the company, through a recent regulatory filing with the Bombay Stock Exchange (BSE), intimated about signing a 15-year contract with “Equinor ASA”, a Norwegian Giant, for Liquefied Natural Gas (LNG).
Equinor has been amongst the established leaders in the ‘Oil & Gas’ sector over the last 50 years, with a market cap of $75 Bln wherein majority shares are owned by the Norwegian Government.
As per the agreement, there would be annual supplies of up to 0.65 million tonnes over 15 years, beginning in 2026. The tie-up also provides room for trading LNG parcels in the growing LNG demands in India as well as accommodating the growing captive needs of DFPCL. The LNG will be delivered to the west coast of India.
With this tie-up, the small-cap company aims to strengthen its value chain with the contract and solidify its value chain from ‘Gas’ to ‘Ammonia’ to various downstream fertilisers, mining chemicals, and industrial chemicals.
“We are very happy to enter into this long-term agreement with Equinor for supply of LNG. This will put on a solid footing Deepak Fertilisers value-chain right from Gas to Ammonia to building block Nitric Acids to downstream Fertilisers, Mining Chemicals and Industrial Chemicals, helping it to absorb Global volatility as well as enhance overall margins.”, commented Mr. Sailesh Mehta, Chairman & MD, DFPCL.
During the recent financial quarters, the company reported a dip in numbers as far as the operating revenues as well as after-tax profits are concerned. The former fell from Rs 2,424 crores during Q2FY24 to Rs 1,852 crores during Q3FY24 and the latter, keeping the timeframe the same, reduced from Rs 63 crores to Rs 60 crores.
Deepak Fertilisers & Petrochemicals Corporation Limited is engaged in carrying on the business of fertilizers, bulk chemicals, mining chemicals, agri-services, and value-added real estate. The company’s segments include ‘chemicals’, ‘fertilizers’, ‘realty’, and others. The group caters mainly to the needs of markets in India.
Written by Amit Madnani
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