JM Financial retains Buy on Deepak Nitrite, keeps target price unchanged at Rs 2,305

JM Financial has maintained Buy call on Deepak Nitrite with a target price of Rs 2,305 (unchanged). The current market price of Deepak Nitrite is Rs 2027.75. The time period given by the analyst is a year when Deepak Nitrite price can reach the defined target. Deepak Nitrite, incorporated in 1970, is a Mid Cap company with a market cap of Rs 27650.96 crore, operating in Chemicals sector.

Deepak Nitrite's key products/revenue segments include Fine Chemicals, Export Incentives, Scrap, Sale of services and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 2202.48 crore, up 14.45% from last quarter Total Income of Rs 1924.39 crore and up 2.66% from last year same quarter Total Income of Rs 2145.34 crore. The company has reported net profit after tax of Rs 202.50 crore in the latest quarter.

The company's top management includes Mr.Deepak C Mehta, Mr.Sanjay Asher, Mrs.Purvi Sheth, Mr.Punit Lalbhai, Mr.Vipul Shah, Mr.Prakash Samudra, Mr.Girish Satarkar, Mr.Meghav Mehta, Mr.Ajay C Mehta, Mr.Sanjay Upadhyay, Mr.Maulik D Mehta, Mr.Dileep Choksi. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-03-2025, the company has a total of 14 Crore shares outstanding.

Investment Rationale
Deepak Nitrite's 4QFY25 earnings print was significantly better than our and consensus expectations primarily on account of government incentives. The company will continue to receive these incentives on the existing phenol complex as well the upcoming polycarbonate complex. On the operational front, advanced intermediates (AI) performance showed sequential improvement. Going ahead, volume normalisation in the AI segment is likely from 2HFY26. Moreover, commissioning of backward integration capex in the AI segment (including nitric acid, photo chlorination) should help lift AI segment margins from 2QFY26, according to JM FInancial. On the phenolics side, benefits of MIBK/MIBC and acetophenone commissioning are likely to flow through from 3QFY26. Besides that, we are also factoring in some improvement in phenol-acetone spreads. There has been a delay in the commissioning of various projects. Hence, on overall basis, the brokerage's FY26-27 EPS estimates are revised downwards by ~1%. Since Deepak Nitrite has the potential to more than quadruple its EBITDA over thenext 5 years, JM Financial maintains their BUY rating on the name with an unchanged Mar?26 target price of Rs 2,305/share (based on 30x Mar?27E EPS).

Promoter/FII Holdings
Promoters held 49.28 per cent stake in the company as of 31-Mar-2025, while FIIs owned 6.64 per cent, DIIs 23.22 per cent.