Subdued performance in AI segment leads to miss

11 Mar 2024
5 Min read 
  • Deepak Nitrite (DN) reported a miss in 3QFY24 due to weak performance in the advance intermediate (AI) segment.
  •  The AI segment was affected by pricing pressure from Chinese suppliers and weak demand in agrochem, textiles, and dyes & pigments sectors.
  •  However, the DPL segment performed well with healthy sales volumes and better plant efficiency.
  •  DN has undertaken debottlenecking activities at its Phenol plant and expects new projects to have incremental margins.
  •  EBITDA/EPS estimates for FY24 have been cut by 6%/9%, but FY25/FY26 estimates remain broadly unchanged.
  •  The stock is trading at ~30x FY25E EPS and ~20x FY25E EV/EBITDA.
  •  The company aims to become the largest player in solvents and is pursuing backward and forward integration projects.
  •  The stock has a Neutral rating with a target price of INR2,185.
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