Deepak Nitrite Q1 Review - Increased Emphasis On Downstream Products To Boost Growth: Systematix

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Systematix Research Report

Deepak Nitrite Ltd.’s Q1 FY22 results were slightly above our estimates with sales/Ebitda/adjusted profit after tax growth of 4%/down 1%/4% QoQ, led by the performance chemicals (8% QoQ) and phenolics (7% QoQ) divisions that benefitted from a 31%/8%/24% QoQ increase in the prices of di-amino stilbene disulphate acid/optical brightening agents/phenol.

The sales of basic chemicals (up 2% QoQ) and fine and specialty chemicals (flat) were wedged due to lockdowns and logistics-related challenges.

Deepak Nitrite's operating profit margin was 29.6% versus 31.1% QoQ (estimate of 29.1%) due to margin pressures in the fine and specialty and performance chemicals divisions as raw material and freight costs remained elevated.

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