Shares of Deepak Nitrite have delivered over 500 per cent returns to its shareholders in the last three years. Not only that, long-term investors have made big gains by investing in this stock as it has surged over 12,000 per cent in the last ten years.
The scrip closed 2.56 per cent lower at Rs 1,918.65 against the previous close of Rs 1,969.15 amid a brutal market sell-off. Market cap of the company fell to Rs 26,169.05 crore.
The company's net profit came in at Rs 267 crore in March 2022 down 7.89 per cent from Rs. 290 crore in March 2021. Net sales stood at Rs 1,872 crore in March 2022 up 27.96 per cent from Rs 1,463 crore in March 2021.
"The stock trades at 26x/24x FY23E/FY24E EPS. With the pricing environment remaining volatile and with limited earnings growth opportunities till the time Greenfield expansions get commissioned (phenol downstream products would result in captive phenol consumption of 35-40%), we maintain our Neutral rating. We value the stock at 26x FY24E EPS to arrive at a target price of Rs 2,320," Motilal Oswal said.
Dolat Capital believes that the entry into downstream derivatives and into advanced chemistries is expected to subside the cyclicality in the business whilst generating strong FCFF and ROE generation.
"We continue to have a buy rating on the stock with a revised target price of Rs 2,881 per share (30x FY24E)," the brokerage house added.
Notably, the insurance behemoth Life Insurance Corporation of India (LIC) was on a shopping spree on Dalal Street in the March quarter and increased its stake in Deepak Nitrite.
Deepak Nitrite is a chemical manufacturing company. The company's segments include basic chemicals, fine and speciality chemicals, performance products and phenolics.
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