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Friday 22 March 2013

Deepak Nitrite - Interesting play in the chemicals space

Here is a short write-up on Deepak Nitrite.

§         Established in 1970s by Mr. C.K. Mehta
§         Market leader in India for Sodium Nitrite / Nitrate & Nitro Toluenes.
§         DNL is a top 3 global supplier for products like Cumidines and Oximes
§         On par with global players in colour intermediates business
§         Exports are around 44% of sales (FY12) & 29% YTD (FY13)
§         Manufacturing of hazardous chemicals is shifting from developed economies to developing economies due to environmental hazards. India is benefiting from this trend.
§         Diversified  customer  base  consisting  of  some  of  the  largest chemical  companies  in  the  world,  including  Sygenta  Global,  Bayer  Crop  Science,  BASF, Kemira,  Lanxess,  Clariant,  Isochem,  Lonza,  IOC,  Reliance &  Essar.
§         Fuel additives & Solar Salts are expected to be significant growth drivers in the future.
§         Fuel additives grew by 56% in Fy12. It was 98 cr in FY12. In 9mFY13, it is already 130 cr with Q3 35cr. Company is expecting 150-160 cr from this segment this year.

Organic Intermediates
Inorganic Intermediates
Fine & Specialty Chemicals
Product Categories
Nitro Toluenes, Fuel Additives, Nitro Chloro Benzene, Xylidines, Cumidines
Sodium Nitrite,
Sodium Nitrate
DASDA, Oximes, Fuel Additives,  Specialty chemicals 
Pigments, Dyestuffs, Fuel
Pigments, Dyes,, Rubber
Chemicals, Explosives,
Food Colour, Electro
Plating Glass
Paper,  Detergent,  Textiles,
Agrochemicals,  Fuel Additives, Pharmaceuticals
% of revenue


Market Cap: Rs. 273.42 Crores
Current Price: Rs. 260.40
Book Value: Rs. 267.78
Stock P/E: 7.20
Dividend Yield: 2.30%
Stock is Rs. 10.00 paid up
52 Week High/Low: Rs. 325.00 / Rs. 139.00
Dividend Payout Ratio: 16.54%
Debt to equity: 1.18 (high... key monitorable)
Price to book value: 0.97
EPS FY12 = 22.06

9M EPS FY13 = 27.14
Fy13 EPS (exp) = 31-32
FY14 EPS (exp) = 38-40

For the next 2 years, earnings can grow 30%. If there is a moderate PE re-rating (only possible if the mid/small cap market sentiment improves) to 9-10, the price in a year can be around 350-400.

Disclosure: I am invested in Deepak Nitrite and my views are likely to be biased.


  1. Have u checked HDFC securities report on Deepak Nitrite ?

    1. Hi Kunal,

      I don't recollect to have read it. Could you please email it to me?