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Akshay Rajawat    

Surat, India

I am CA student and along side perusing the CFA (U.S.). I have a 6 month experience in Equity Research where i have done my internship programme in the same. I am keen to write an articles on Equity.

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Contributor since: 2022







Deepak Nitrite Ltd

Q3FY23 Result Analysis

Business Overview

Deepak Nitrite (DNL) is one of the fastest growing and trusted chemical intermediates company in India with a diversified portfolio of products that caters to multiple industries with myriad applications. DNL is recognized globally as a ‘Responsible Manufacturer’ and as a ‘Supplier of Choice’ by marquee customers. Led by an able management team, DNL has leveraged process expertise, technological prowess and operational excellence to capitalise on opportunities for growth and deliver sustained value for stakeholders.

Strong Track Record


Q3FY23 Performance Overview

  • The Company has operated all plants, except for Nandesari unit at high utilization rates. The Phenol plant has clocked an average utilization of 117% for the quarter, and achieved highest-ever quarterly domestic sale and highest production per day of phenol.
  • Revenue in the Advanced Intermediates segment increased by 19% Y-o-Y due to sustained healthy demand from key customers, while the rise in EBITDA was 2%, impacted by factors such continued higher input prices not fully passed on to customers, increased power and fuel costs, and higher overhead expenses linked to Nandesari plant restart.
  • The Company registered highest-ever production of DASDA during Q3. It also attained highest-ever sales volume and turnover of OBA in Q3FY23;this is a commendable feat achieved in backdrop of uncertain global operating environment.
  • Revenues from the Phenolics segment grew 13% Y-o-Y supported by strong volume growth. Due to moderation in prices of products which was higher last year.
  • The Advanced intermediates business has added sizeable international business including new customers in export business.
  • With increased export revenues, strategic decision to secure certain raw material for assured supply and utilization of surplus funds for advance payment to suppliers, there has been an increase in working capital intensity this quarter.
  • DPL repaid a term loan of ₹ 50 crore in the month of October 2022, taking the Company’s Net Debt to Equity ratio to 0.07x as compared to 0.20xlast year.
  • On a consolidated basis, the Company continues to remain debt-free, with a net worth of ₹ 3,860 crore (Consolidated) and ₹ 2,528 crore (Standalone), thereby strengthening its balance sheet for future expansion.

Projects Update

Investment in Deepak Chem Tech Limited

  • As of end Q3FY23,DNLhas invested ₹ 315 crore in wholly owned subsidiary Deepak Chem Tech Limited
  • In the month of Jan 2023, DNL invested a further ₹ RESPONSIBLE CHEMISTRY 80 crore in Deepak Chem Tech Limited, taking the total investment to crore.

Update on projects implementation

  • Installation of capacity for Spent SAC will be commissioned in Q4 of the current financial year. This will be for captive consumption and lead to assured supply as well as reduced procurement from the open market.
  • Acetone Derivatives (MIBK & MIBC): Engineering and design work of the greenfield facility is underway and its commissioning will be as planned.
  • Backward integration projects are on track and are expected to be commissioned in early in H2 of FY 2024.

Details of ongoing capex program of Rs 1,500 Cr

Completed or near completion:-

  • Agro-chemexpansion and Spent Sulfuric Acid Concentration (SAC) Plant.
  • Debottlenecking of Phenol and expected commissioning in Q4 of FY23

Under implementation.

  • Products for backward integration in fluorination space & acid plant. Expected commissioning in H2 FY24.
  • Downstreamproducts of acetone: MIBK, MIBC. Expected commissioning in Q4 of FY24.
  • Other capex, including infrastructure for present and future requirements

NewProjects approved (Rs 1,000 cr approx.):

  • Project for Polymer compounding
  • Additional hydrogenation and multipurpose distillation capacity
  • Sodium Nitrite project in Oman

Q3FY23 - Financial Highlights


  • Strong topline performance was driven by maintaining leadership in market share and geographies.
  • The Company has been highly responsive in order to optimise pockets of opportunities across product categories.
  • Current landscape of realignment of global supply chains and seeking of assured supply by customers has limited the ability to drive higher realisations.


  • EBITDA performance was muted on a Y-o-Y basis due to high base of last year combined with continued increase in some input as well as utility costs, including power and fuel Partial passing on of higher input prices, moderation from extreme highs and productivity enhancements have enabled an improved performance ona Q-o-Q basis
  • The positive traction to sustain in the upcoming quarters

9MFY23 Financial Performance

Segment Wise Performance

Advanced Intermediates

Key Highlights

  • Despite facing inflationary pressures and logistical challenges, the company was able to actively cater to strong demand and fulfill its delivery obligations thereby delivering strong revenue growth.
  • The Companyis expected to maintain its performance momentum given its competitive position with assured supply of key inputs
  • Growth in EBITDA on a Y-o-Y basis has trailed the revenue growth due to sharp rise in input costs compared to the corresponding period last year. This is being proactively addressed as opportunities present themselves.


Key Highlights

  • DPL experienced strong sales growt has the Phenol plant maintained high operating levels, effectively over coming significant external challenges in the global environment during the period under review. Highest-ever quarterly domestic sales volume and daily production of Phenol was recorded in Q3.
  • The moderation in EBITDA was due to a reduced realization following the unusually high realization in the base period. After sharp volatility in the preceding quarters the demand-supply situation is stabilizing, and the Company anticipates steady price trends going ahead. 


DNL will benefit significantly from the enormous opportunities that are emerging in the sector as a result of the 'Make in India for the World’ initiative, as well as the strong recurrence of the China+1 strategy.

The Company has projects worth ₹ 15 billion lined up across major product lines, that is a testament to its focus on long-term, continuous shareholder value generation as well as development and profitability.

DNL continues to maintain its position as a top partner for major Indian and international conglomerates by utilizing its strong manufacturing infrastructure and extensive chemistry knowledge.

The Company is well poised to drive incremental gains across both the segments on the back of scheduled commissioning of key projects in this and next financial year. These projects encompass:

  • Brownfield expansion of select products
  • Strengthening backward integration capabilities of key inputs which will also enhance margins
  • Value-added downstream derivatives of Phenol and Acetone including solvents
  • Adding newchemistry platforms of photo chlorination and fluorination
  • Setting up of a compounding asset to participate in India’s large & niche requirements in 5G, electronics, EVs and medical devices.
  • New Products using highly efficient chemistries that will cater to various end-user industries

Consol Financials

Consolidated Revenue

EBITDA Margin Segment Wise


I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

Disc - Not and recommendation. Source - Company result, Investor Presentation and Press Release

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.


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