Deepak Nitrite

SAFE HEAVEN STOCKS

Deepak Nitrite is a safe heaven stock having potential to give minimum 30-40% or even Double.

CMP:Rs.240

Accmulate – 220-240 Zone

Target: Rs.300, 450, 600+

TF – 12 to 30 months.

👉Deepak Nitrite has turned itself from Smallcap to Midcap in last Decade & Soon it would be Midcap To Largecap in next Decade.

👉If Someone has Invested just Rs.100000 in Deepak Nitrite in 2001 ,When it was trading at Rs.2 ( Face Value 10), In 2014 Company Announced Split To Rs.2 & Bonus 1:1. One might have today 50000 Shares and it’s valued at almost 1.2Crs.

100000 to 1.2 Crs cr in just 17 Years.

👉In next 10 years we expect stock to be 10 bagger also.g

👉We had Recommened this stock in Oct 2017 @ 170 Levels after that Stock touched High Of 298 Giving almost 75% Returns in just 6 months.

👉Now again stock is available at Resonable valuation.Stock can be accumulated between 220-240 Zone, for medium to long term

👉Deepak Nitrite Limited established in 1970s by Mr. C.K. Mehta, is an Indian chemical manufacturing company. It enjoys a leading market position in most of its products in the domestic as well as global markets.

👉A market leader for Inorganic intermediates and NitroToluenes in India .

👉Among top global players for products like Xylidines, Color intermediates, Cumidines and Oximes .

👉Strong R&D focus has led to in-house development of new product applications and

Deepak Nitrite has wide understanding customer preferences.

Wide distribution network across the globe with footprints in over 30 countries.

DNL HAS UNDERTAKEN A GREENFIELD EXPANSION PLAN AT DAHEJ THROUGH ITS WHOLLY OWNED

SUBSIDIARY DEEPAK PHENOLICS LTD (DPL ) ,DAHEJ, GUJARAT FOR MANUFACTURING PHENOL AND ACETONE

In India 80% of Phenols and Acetone is imported from other countries.

Deepak Nitrite is building the plant

to meet atleast 60% of od domestic consumption.

Domestic industry of phenolls and acetone is valued at Approx Rs.4000-5000 crores.

A simple calculation what makes this stock a multibagger: 60%*Rs.4000-5000 crores = Rs. 2400-3000 crores.

Turnover For Fy 2016-17= Rs.1365 cr.

Turnover for FY 17-18 = Rs.1550 cr

👉This Rs.1550 crores is expected to grow by atleast 5-10% because company is constantly introducing value added products.

Expected Turnover by 2019

=(1550cr + Growth)+2400= RS.4000 Crores Approx.(Triple turnover)

TOPLINE READY TO EXPLODE

SUPER DHAMAKA BY 2019 End OR by Mid 2020 .

👉Bottom line is more interesting : Feedstock required for Acetone and Phenol i.e. cummene will be manufactured in house.

👉As Feedstock is also manufactured Inhouse Margins will be good and also gives good safety of margin if phenol & acetone Prices corrects.

👉Deepak nitrites Strategy to manufacture feedstock inhouse is a backward integration step and also plans to manufacture some high margun forward products .

👉For these mega expansion Deepak Nitrite has invested close to Rs.1400 crores in Dahej , which has already commenced trial production or pre commissioning.

👉Expansion funds are raised through QIP & Internal accurals.Latest QIP price was Rs.264 and Institutional Holding has increased significantly.

👉This project would be a Turning point for Deepak nitrite and would take company to next level or orbit from Small Cap to Mid size.( Revenues from Rs.1400Crs to Rs.4000 Crs.

👉This project will be highly ROI & ROE accretive and has capacity to boost earning to the tune of 300%.

👉We expect In current year Turnover of company to increase by atleast 60% and PAT to increase 40% and FY19 TO FY21 to grow by atleast 60% CAGR.

👉Debt level is at comfortable level with debt to equity ratio less then 1.5 with such kind of expansion such debt is acceptable .

👉EBITA to grow from current Rs.196 Crs to atleast RS.700 Crs.

👉One can easily say stock has potential to grow wealth by 20-45% and also can double .

👉STOCK CAN BE ADDEDON EVERY DECLINE.

KEY RISK: High Crude Oil Price & Low Product Realisation. As Project is almost complete so project specific risk is nowhere or very minimum.

2 thoughts on “Deepak Nitrite

  1. Nice analysis, i think this one already run up by 100% since this reco. For it to be 10 bagger in 10 yrs(240 to 2400) it needs to grow by 26%cagr. Is it likely?

    Like

    1. 1st had recommended this Gem @170
      Stock already gave 3x Returns in 2.5 Years and made a high of 540.And Again corrected till 310 in this Downfall. Can easily be 650+ by end on this year and 2021 & 2022 can cross four figure mark.Sky is the limited if one had patience to hold this STOCK for next 5 to 10 years.

      Like

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