1
Please refer to important disclosures at the end of this report
1
1
Deepak Nitrite is a chemical manufacturing company. The company offers sodium
nitrite, 2 Ethyl Hexyl Nitrate and optical brightening agent.DNL has a diversified
portfolio consisting of three segments namely, Basic Chemicals, Fine & Specialty
Chemicals and Performance Products, with about 50% of total sales
contributed by Basic Chemicals at present. The company expects earnings in Fine
and specialty chemical (FSC) segment to stem from high margin pharma and
personal care intermediaries. The company aims to change its sales strategy as well
as reduce certain fixed costs, mainly at its U.S.based marketing subsidiary and also in
other geographies, so as to improve the profitability levels of this segment. DNL’s
large scale Greenfield project at Dahej for manufacturing of 200,000 MTPA phenol
and 120,000 MTP acetone is proceeding as per schedule with 55% of the
construction work completed and planned COD (Commercial Operation Date)
in January 2018. In March 2017, DNL raised additional `150cr through its
second Qualified Institutional Placement (QIP) issue to meet part of the equity
requirements for the project, though timely tie up of the balance equity funding
remains important. The project economics remains favourable given the
widespread applications of the products and their healthy demand within the
country along with limited domestic manufacturing capacities for the same.
It’s debt to equity ratio has improved from 0.69x in FY15 to 0.33x in FY17. The
company has a ROE of 9.17% FY17 TTM earnings and it is currently maintaining an
average dividend payout of 17.38%. Hence BUY.
.
BUY
CMP `223
1.2
Reuters Code
DPNT:BO
DN:IN
2
BSE Sensex
33,562
Nifty
10,342
Face Value (`)
Commodity Chemcials
Market Cap (` cr)
2,927
52 Week High / Low
234/75.8
Avg. Daily Volume
75,690
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Deepak Nitrite Ltd
Others | Commodity Chemical
Nov 23, 2017
2
Deepak Nitrite Ltd |Commodity Chemicals
Oct 13, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Deepak Nitrite
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)