💢Indian chemical industry is going to benefit once current pandemic of covid 2019 ends.Many speciality chemical companies would withstand the current situation and Deepak Nitrite can be one of them and emerge as leader in its space.
💢Deepak nitrite was established in year 1970 and it has 50 years of legacy.Its subsidiary Deepak Phenolics has created a new chapter in India’s Phenol and Acetone growth story.It has state of art facility and most efficient plant for Phenol and Acetone.
💢Last time we had Recommend Deepak Nitrite in Sept 2017 @170 and gave almost 350% Returns in just 3.5 years and had outperformed the markets espically when all Midcaps stocks and whole MIDCAPS basket was on Downfall & has withstand in wroste situation also.
💢Deepak Nitrite has five plants located at Dahej, Nandesari,Roha,Taloja and Hyderabad.It has 100+ products served in various industries and 56 Applications supported world wide.
💢Deepak Nitrite has lined up investment of around ₹400 cr for setting up solvent isopropyl alcohol (IPA) capacity at its Dahej facility, a power plant, though risks to cut in capex looms large on account of perceived demand stress due to Covid 2019. It had recently also acquired 125 acers of industrial land in Dahej Gujurat near Baroda at cost of around ₹100 crore.
💢Last time in 2018 company had done Expansion of Greenfield project for its Phenol and Acetone plant.
💢Company sells many products like Acetone,phenol,sodium nitrite and many speciality chemicals and its application are used in Agrochemical,Dyes & Pigments,Fuel Additives,Pharmaceutical,Rubber, Paper Detergent and personal care.
💢Deepak Nitrite has precence in over 30 countries all over world and also has almost 70% Market share in Sodium Nitrite & Nitro Toluenes in India.And is one of the largest producer of Phenol and Acetone.Company has investment 1700cr in all its expansion in setting Greenfield projects since 2016.Company is also Top 3 producer in world for Xylidines,cuminides & oximes.
💢Caters 30+ countries all around the world
💢On Valuation front stock is currently trading just 12 Times FY21 Earnings at CMP of 453.We expect company to do well in 2021 and 2022 to 2024 where we can see SUSTAINED growth in and Topline and bottomline both can explode.Recently stock had hit low of 310 on 23rd march’20 , which we feel wont be violated in normal situation.Agressive investors should start adding at CMP and on all DIPS in SIP and conservative players can wait for correction and try to add between 360 to 400 and all DIPS.
💢Currently plants are running at 20% to 40% of the capacity.It would take 3 to 4 months to reach 80% to 90% Utilization.In short term there can be some fall in stock prices.But once things effected Due to covid 2019 gets settle, There is no looking back.
💢In last 10 years company has grown from smallcap to Midcap And in next 10 years it can transform itself from Midcap to Largecap.
💢One can expect STOCK to reach 700 to 750 in next 18 to 24 months. And 1000 in 24 to 36 months.
💢If one had vision of 9 to 10 years STOCK can create huge wealth and can be 10x kind of a stock going forward.
Disc – All views expressed are personal and only for Educational and study purpose. Consult Your financial advisor before investing or taking any position based on above article.