Deepak Nitrite share price surged nearly 12 per cent to hit all-time high of Rs 1,240 in intra-day on the Bombay Stock Exchange on Monday after the chemical manufacturing company reported better-than expected earnings during December quarter of 2020. Shares of Deepak Nitrite, which is one of the leading chemical intermediates companies in India, have rallied 300 per cent from its 52-week low of Rs 310 as on March 19, 2020, on improving demand scenario across several end-user industries such as plywood, pharma, adhesives, sanitisers, chemicals and paints.
The stock has also reaped benefits of the manufacturing shift from China to India in chemicals industries by substituting majority of the local market imports of phenol and acetone. The company is the largest producer of phenol and acetone in India and a leading global producer of sodium nitrite.
On Monday, Deepak Nitrite shares belled the day in positive terrain at Rs 1,138 against previous closing price of Rs 1,110.10 on the BSE. During the day's trade, the stock surged as much as 11.7 per cent to hit record high of Rs 1,240, before closing at Rs 1,178.55, up 6.17 per cent. The market cap of the company surged to Rs 16,074.60 crore.
On the volume front, there was surge in buying as 3.01 lakh shares changed hands over the counter, as compared to two-week average volume of 0.66 lakh shares.
The rally was triggered by the company's strong third quarter performance. Its consolidated net profit surged by 38.19 per cent to Rs 216.56 crore as against Rs 156.71 crore during the previous quarter ended December 2019, on the back of operational improvement as well as lower finance costs and depreciation. Revenues grew 9 per cent to Rs 1,240 crore in Q3 FY21 led by robust YoY improvement in the phenolics business aided by incremental contribution from IPA products.
The company, in its investors presentation, said that successful vaccine diplomacy by the Indian government has helped to elevate the status and competence of Indian manufacturing sector in the eyes of the world, which is expected to have a multi-layered impact. Immediate impact will be the continued shift from China to India for manufacturing chemicals which is already evident and which holds potential for further acceleration in upcoming quarters. The second order impact will be from growth of the domestic market. India is already a lucrative market for the chemical industry and Deepak Nitrite is an ideal aspirant to ride on the India chemical manufacturing theme alongside its diversified product mix with decades of manufacturing experience, it said.