Deepak Nitrite share: Recent tensions in the Middle East are influencing global stock market directions. However, in light of the festive season and the Q2 results, the domestic market is witnessing vigorous stock actions, providing opportunities for investors to capitalize. One stock gaining attention in the specialty chemical sector is Deepak Nitrite, due to a “BUY” rating given by Axis Capital. The long-term outlook for this share suggests a potential upside of 20%.
Promising Long-Term Share: Axis Capital recommends investing in Deepak Nitrite, with a predicted upside target price of Rs 2520. Prior to this, the stock closed at Rs 1529.50, implying an almost 20% return potential for investors in the long run.
Key Triggers for Deepak Nitrite Share: Several vital triggers could drive the growth of Deepak Nitrite. Import substitution is a significant long-term growth opportunity. With the company holding a 56% stake in the country’s phenol production and the national phenol import increasing annually by 10%, Deepak Nitrite is eyeing the Rs 15,000 crore import market. The company aims to double its phenol capacity by FY27, targeting a production increase from 3 Lk Mn tons to 6 Lk Mn tons.
Funding for Capex: To expand its capacity, Deepak Nitrite plans to mobilize funds through internal sources and loans. Under this initiative, the company will invest Rs 7500 crores in capital expenditure from FY23-27E. An internal funding of Rs 5000 crores is anticipated. Due to this capex, an estimated increase in operating profit (EBITDA) is expected, with a yearly rise of 19% projected from FY23-30E.
Brokerage View on Deepak Nitrite share: Axis Capital opines that Deepak Nitrite has overcome its challenging phase. Nevertheless, fluctuations in commodity prices and adverse circumstances might affect the firm in FY24. Predictions suggest an annual EBITDA growth of 23% and a Profit After Tax (PAT) increase of 21% from FY24-30E.
Potential Risks for Deepak Nitrite share: Investors should also be aware of several risks related to Deepak Nitrite:
- Fluctuations in the prices of Phenol Acetone.
- Delays in starting the capex.
- Adverse market conditions.
While Deepak Nitrite presents promising growth opportunities, investors should make informed decisions by considering both the potential gains and associated risks.