Q4 FY 2022 Review

Deepak Nitrite Limited reported net revenue of ₹1,872.35 crores for the quarter ended March 31, 2022, compared to ₹1,463.23 crores for March 31, 2021. EBIT and Profit After Tax were ₹369.25 crores and ₹267.21 crores for the quarter ended March 31, 2022, as compared to ₹404.14 crores and ₹290.11 crores, during the corresponding quarter of the previous year.

Deepak Nitrite Limited - Investment Summary

Deepak Nitrite Limited - Overview

• Deepak Nitrite Limited is a chemical manufacturing company based in Gujarat, India.

• It is the leading manufacturer of organic, inorganic, fine, and specialty chemicals.

• On June 2, 2022, the fire caused damages to the warehouse, offices, utilities, and part of the manufacturing facility; the impact is still being assessed, but no casualties are reported and both loss of assets, as well as loss of business, are covered under insurance.

• The company has been assigned an AA credit rating on a long-term bank facility.

Deepak Nitrite Limited - Quarterly Summary

Business

• Deepak Nitrite Limited (DNL) is the flagship of the Deepak Group, which was incorporated in 1970 by C.K. Mehta.

• It began as a fully indigenous sodium nitrite and sodium nitrate manufacturer before gradually widening its product portfolio over the years.

• The company has five manufacturing facilities, Nandesari and Dahej in Gujarat, Taloja and Roha in Maharashtra, and Hyderabad in Telangana.

• DNL also has a research and development facility at Nandesari in Gujarat.

• The company’s growth has also been aided by the strategic acquisition of companies with complementary product lines.

• In November 2018, the company commissioned its phenol and acetone manufacturing plant at Dahej under its wholly-owned subsidiary, Deepak Phenolics Limited.

• DNL caters to over 1000 customers in 6 countries with more than 100 products.

• Some of the company’s notable clients include BASF, Biocon, Reliance, Syngenta, Aarti Drugs, PI Industries, Atul, Lupin, and many more.

• The company is amongst the top 3 global players for the products like Xylidines, Cumidines, and Oximes.

• The company’s product portfolio is broadly divided into three parts:

  • Basic Chemicals:

    • Within basic chemicals, DNL manufactures nitrites, nitrogen toluidines, and fuel additives.

    • As most of these chemicals are manufactured and sold in high volumes with higher price sensitivity, cost leadership plays a pivotal role in gaining competitive advantages, which drives growth and profitability.

    • User industries for Basic Chemicals:

      • Colourants.

      • Rubber Chemicals.

      • Pigments.

      • Explosives.

      • Dyes.

      • Pharmaceuticals.

      • And many more.

  • Fine Specialty Chemicals:

    • DNL manufactures niche and specialized products under the Fine and Specialty Chemicals segments.

    • These are developed in-house, using the company’s expertise in process engineering and technical know-how.

    • Among other things, it produces specialty chemicals such as Xylidines, Oximes, and Cumidines.

    • User industries for Fines Speciality Chemicals:

      • Agro-Chemicals.

      • Colourants.

      • Pigments

      • Pharmaceuticals and Personal Wellness.

  • Performance Products:

    • The Performance Products segment of the company has two essential products at present: Optical Brightening Agents and DASDA.

    • These products have specific attributes and serve to enable particular characteristics to the end-products.

    • User industries for Performance Products:

      • Paper.

      • Detergents.

      • Textiles.

• Out of the total revenue, 62% of revenue have generated from Phenolics, 18% from Basic Chemicals, 12% from Fine & Speciality Chemicals, and 8% from Performance Products in FY 2022, compared to 58%, 17%, 17% and 7% in FY 2020.

Deepak Nitrite Limited - Revenue Trend

Topline and Bottomline trend (crores)

Ratio Analysis