Aim to grow across the value chain– Deepak Nitrite

Aim to grow across the value chain– Deepak Nitrite

Update on the Indian Equity Market:

On Wednesday, NIFTY closed 0.8% up at 16,259. Top gainers in NIFTY50 were HDFC(+4.6%), KOTAKBANK (+3.9%), and ICICIBANK (+3.1%). The top losers were GRASIM (-2.5%), TITAN (-2.1%), and TATAMOTORS (-1.8%). The TOP gaining sectorswere FINANCIAL SERVICES (+2.6%),BANK (+2.3%), and PRIVATE BANK (+1.9%) while the top sectoral losers were REALTY (-1.7%), MEDIA (-1.2%), AUTO(-0.9%), and FMCG (-0.9%).

Aim to grow across the value chain– Deepak Nitrite

Excerpts of an interview with the Mr. Deepak Mehta, Chairman and MD of Deepak Nitrite, published on ET Now dated 3rd August 2021:

  • The growth plan for Deepak Nitrite is to be present across the value chain from building blocks to final specialty chemicals. This will give the company a competitive edge over global peers.
  • Deepak Nitrite continues to look for opportunities to complement existing business. Earlier the company was only into nitration chemistry. Then the company went on to add hydrogenation. As both these are catalytic chemistries, the company then looked into what can be done in catalysis.
  • Deepak Nitrite has also recently committed to add fluorination to its capabilities.
  • On specialty chemicals side, Deepak Nitrite will keep adding complementary businesses to provide a wide basket of capabilities to clients.
  • Even on the commodity chemicals side, Deepak Nitrite is trying to offer a broader spectrum.
  • Several American and European end user clients have shown willingness to look at India in their China +1 strategy. But long-term commitments towards India or any country have been slow because of the demand uncertainties in the covid-19 pandemic era.
  • As a strategy, every three or four years, Deepak Nitrite will go back to looking at major investmentsfor the next stage of growth.

Asset Multiplier comments:

  • Indian Specialty chemical companies have come in the spotlight in the last few months due to several tailwinds in the sector. Higher demand expectation from end user segments, supply chain diversification from China dependence, import substitution have all been tailwinds for the sector.
  • Companies with niche capabilities are benefitting due to their expertise in respective areas.


Consensus Estimate: (Source: market screener website)


  • The closing price of Deepak Nitrite was ₹ 2,067/- as of 4-August-2021.  It traded at 30x/ 27x/ 25x the consensus earnings estimate of ₹ 67.9/ 76.9/ 81.4 for FY22E/23E/24E respectively.
  • The consensus price target is ₹2,037/- which trades at 25x the earnings estimate for FY24E of ₹ 81.4/-


Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”


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