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