Deepak Nitrite specializes in producing a wide range of chemicals such as agrochemicals and pharmaceuticals.
Deepak Nitrite is a global leader in the specialty chemical Xylidine (primarily used in dyes & pharmaceuticals), showcasing its prominence in the industry. Let’s discuss what would be Deepak Nitrite’s share price target by 2025.
Deepak Nitrite Share Price Target 2025
Deepak Nitrite’s current share price is trading between Rs 2,200 to Rs 2,300 which is 10% higher than 1-year ago’s price.
Experts are forecasting a range of Rs 3,000 to Rs 3,100. One key reason for this bullish outlook is the growth potential in Deepak Nitrite’s industry.
The chemical sector has been on a steady rise, and Deepak Nitrite is riding that wave. Increasing demand for chemicals in various applications signifies well for the company’s future revenue.
Fundamental Analysis of Deepak Nitrite
Deepak Nitrite’s financial health seems robust. With a market capitalization of Rs 30,000 crore and debt standing at around a mere 70 crore, it’s essentially a debt-free company. However, inflation seems to be a problem in maintaining the profitability of the company’s operations.
Let’s discuss other important factors like revenue and profit growth.
I. Revenue growth
Let’s dig deeper into the company’s core and its fundamentals. Deepak Nitrite has shown remarkable growth in revenue over the past five years, reaching an all-time high in recent times.
Just take a look:
- March 2019: Rs 2,700 crore
- March 2020: Rs 4,230 crore
- March 2021: Rs 4,360 crore
- March 2022: Rs 6,802 crore
- March 2023: Rs 7,972 crore
II. Profit growth
Over the past five years, profits have grown by a whopping 59%. In the last three years, the growth rate has been a still commendable 11%.
However, on the flip side, their profit took a hit, declining by a substantial 20.1%.
Here’s the breakdown:
- March 2019: Rs 174 crore
- March 2020: Rs 611 crore
- March 2021: Rs 776 crore
- March 2022: Rs 1,067 crore
- March 2023: Rs 852 crore
III. Return on Equity
Deepak Nitrite’s Return on Equity (ROE) for the most recent available period was approximately 32%. This metric indicates the company’s profitability and efficiency in generating returns for its shareholders based on its equity.
A ROE of 32% suggests that the company is effectively utilizing its equity capital to generate profits.
Technical Analysis of Deepak Nitrite
If you look at Deepak Nitrite’s one-month technical indicators, they’re quite telling. Out of 15 Moving Averages, 13 are flashing buy signals, indicating a strong bullish sentiment. The remaining two, neutral, and the Hull Moving Average is giving a sell signal.
On the oscillators front, 6 out of 11 are in ‘neutral’ territory, 2 are showing ‘Buy’ and 3 are giving ‘Sell’ signal. Even the Relative Strength Index (14) at 58.78 shows a neutral sign.
When you see a majority of oscillators in neutral mode and Moving Averages giving buy signals, it’s like having a conversation with a weather forecaster who says, “The skies are mostly clear, but there might be a few clouds.” It’s not stormy, but there could be some fluctuations.
Deepak Nitrite’s Business Prospects
Deepak Nitrite is a powerhouse in its field, boasting a staggering 75% market share in sodium nitrite, sodium nitrate, and nitrotoluenes right here in India.
But their achievements don’t stop there. They’ve managed to replace a significant chunk of local market imports for Phenol and Acetone, grabbing a remarkable 50% share.
The revenue distribution segment-wise is as below –
Geographic Revenue Distribution is shown in the table below.
|Geographic Region||Revenue Share|
|Rest of the World||22%|
Recently, Deepak Chem Tech, a part of Deepak Nitrite, has joined hands with the Gujarat government.
They’re planning to invest a whopping Rs 5,000 crore in the next four years to set up projects for making Specialty Chemicals such as Phenol, and Acetone.
Based on the above facts you can understand that the chemical giant’s business prospects are looking promising.
To enhance your analysis, you can read our articles on Yes Bank’s target share price, Tata Motor’s target share price, Trident’s share target price, and IRCTC’s target share price by 2025 to find out some other choices if they fit your goals.
Risk Factors of Investing in Deepak Nitrite
#1. Poor Financial Performance
In Deepak Nitrite’s latest quarterly report, revealed on May 22, 2023, the results were a mix of good and not-so-good news. Their total revenue for the quarter ending March 2023 reached Rs 19,739.3 million, which was a modest 5.2% increase compared to the previous year, thanks to growing product demand.
However, their profit after tax in Q4 of the financial year 2023 wasn’t as positive. It came in at Rs 2,338.6 million, marking a significant 12.5% drop from the previous year. This decline was mainly due to higher input prices, which squeezed their profit margins.
Their net profit margin for the quarter also dipped to 11.9%, down by 2.4% compared to the same period in the previous year.
Looking at the entire fiscal year 2023, Deepak Nitrite did report robust total revenue growth of 17.2%, reaching Rs 68,448 million, driven by increased demand for specialty chemicals. However, their profit took a hit, declining by 20.1%.
The Russia-Ukraine conflict played a significant role, causing higher raw material costs and inflationary pressures that impacted the company’s profit.
#2. Other Factors
I. Economic Sensitivity
The chemical industry is highly sensitive to economic cycles. Economic downturns can result in reduced demand for chemicals, impacting the company’s revenue and profitability.
II. Raw Material Price Volatility
The cost of raw materials, such as petrochemicals and other chemicals, can be volatile. Fluctuations in raw material prices can affect the company’s margins and profitability.
III. Global Supply Chain Disruptions
In an interconnected world, disruptions in the global supply chain, whether due to geopolitical tensions such as the Ukraine-Russia war, can impact the availability and cost of raw materials, affecting the company’s operations.
To sum it all up, experts are eyeing a target price range of Rs 3,000 to Rs 3,100 for Deepak Nitrite’s shares in 2025. But remember, investing is a journey, not a sprint. Keep yourself informed, stay curious, and consider diversifying your investments.
Deepak Nitrite reported total revenues of Rs 19,739.3 million for the quarter ending March 2023, reflecting a 5.2% increase compared to the previous year. This growth was driven by rising demand.
The decline in profit can be attributed to elevated input prices, which put pressure on the company’s margins.
In Q4, Deepak Nitrite’s net profit margin was 11.9%, which represented a 2.4% decrease compared to the same period the previous year.
For the fiscal year 2023, Deepak Nitrite reported a healthy total revenue growth of 17.2%, reaching Rs 68,448 million, driven by increased demand for specialty chemicals. However, their profit declined by 20.1%, primarily due to the Russia-Ukraine conflict, resulting in higher input prices and inflationary pressures.
The main factors impacting Deepak Nitrite’s financial performance were elevated input prices, inflationary pressures, and the Russia-Ukraine conflict. These global events affected their profit margins and overall profitability.