Deepak Nitrite Shares Soar 6% as Subsidiary Plans Rs 5,000 Crore Capex in Gujarat

Deepak Nitrite shares rose nearly 10% on plans to invest Rs 5,000 crore in Gujarat.

Shares of Deepak Nitrite (DNL) rose 6% to Rs 2,058.70 on the BSE in intraday trade on Wednesday after the company announced a capital expenditure plan of Rs 5,000 crore in Gujarat.

The stock traded at its highest level since December 2022. It touched a 52-week high of Rs 2,355.55 on November 3, 2022.

The company’s wholly-owned subsidiary, Deepak Chem Tech (formerly known as Deepak Clean Tech), signed a Memorandum of Understanding (MoU) with the Gujarat government on May 23, 2023, intending to invest approximately Rs 5,000 crore over the next four years Come to set up a project in Dahej/Nandesari to produce speciality chemicals, phenol/acetone and bisphenols.

The proposed investment will help reduce India’s import bill. The products of these projects have different end uses, such as speciality chemicals for the needs of the agrochemical and pharmaceutical industries.

“Phenol and acetone are used in various end-user fields such as laminates, plywood, pharmaceuticals, paints, adhesives, etc. Bisphenot is suitable for epoxy resins and adhesives and is the most important raw material for polycarbonate, which is used in There is a wide range of applications in areas such as automotive, electronics and consumer goods, defence, medical equipment, etc.,” the company said.

However, on the exchange front, DNL has underperformed the market with a 3% decline over the past six months due to poor operating performance. In comparison, the S&P BSE Sensex lost 0.31% over the same period.

In FY23, the company’s Ebitda fell 19% year-on-year to Rs 1,337 crore from Rs 1,646 crore in FY22. DNL said a high base effect impacted the EBITDA result due to higher realisation rates for certain products in the prior period, coupled with significant increases in input prices and the cost of utilities such as electricity and fuel in the current period.

The Nandesari factory was unavailable for 40 days due to the fire incident, which had a further impact on Ebitda. The company also faced supply disruptions for some inputs, for which it arranged for more costly alternative sources of supply.

However, revenue rose by a strong 17% YoY to Rs 8,020 crore on the back of higher sales in the phenolics segment in FY23.

DNL said it had substantially de-risked its business model by securing the supply of additional inputs, owning its own power supply and creating value from waste. Moreover, the contract supply of products in these two segments provides high visibility of continued growth.

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