Shares of Deepak Nitrite (DN) have more than doubled investors' money in the past 12 months. The stock rose 6 per cent to hit an all-time high of Rs 2,753.7 on BSE after some media reports suggested that the power outage in China is seen impacting chemical output by as much as 25%.
Deepak Nitrite is an intermediate chemical company, with a diversified business of basic chemicals, fine and specialty chemicals, and performance products. The power crunch could benefit Indian speciality chemical makers.
The multibagger stock has surged from Rs 808 to Rs 2,753.7. It has gained 185 per cent since the beginning of this year and has risen 241 per cent in the past year.
Long-term investors have made big gains by investing in this chemical stock as it has surged 1,986 per cent in the last five years and zoomed 15,242 per cent in the last ten years.
With a market capitalisation of Rs 36,703 crore, the shares stand higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
According to MarketsMojo, the company has declared positive results for the last 4 consecutive quarters and has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 1.29 times. It has strong long-term fundamental strength with an average Return on Capital Employed (ROCE) of 30.34%.
Also, the technical trend has improved from mildly bullish on July 30, 2021, and the stock is technically in a bullish range now. Multiple factors for the stock are bullish like MACD, Bollinger Band, KST and DOW. However, it noted that the valuation seems to be very expensive right now.
"Indian specialty chemical industry over the past one year has seen re-rating overall. The companies have incurred a lot of CAPEX (nearly doubled over the last 5 years) in line with increasing market opportunities. The industry dynamics have changed with its shift towards continuous R&D, improving demand from the end-user industries, China +1 strategy, Push from the Indian government in the form of incentive schemes and strong demand from global players for its products," said a research report by KR Choksey.
Motilal Oswal noted that around 125 acres of land at Dahej (called Dahej-II) would be developed to focus primarily on advance specialty/intermediates in the Life Sciences segment, especially in Fluorination.
A recovery in demand in OBA and DASDA (i.e. Performance Chemicals) is expected over FY22, while demand for Agrochemical and Personal Care products continue to remain robust.
"Backed by a diversified portfolio mix, DN continues to leverage export demand for Fine and Specialty Chemicals as large global customers shift to high-quality products and diversify away from China," the brokerage house added.
The company reported a net profit of Rs 302.63 crore for the quarter ended June 2021 compared to a profit of Rs 98.95 in the year-ago period. Revenue from operations grew 126 per cent to Rs 1,526.22 crore in the June-ended quarter against Rs 674.49 crore a year ago.
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