Deepak Nitrite Analysis | Deepak Nitrite Shares Fundamental Analysis

Deepak Nitrite Shares Fundamental Analysis

Deepak Nitrite FY 2021 AGM notes
  1. Dahej 02 new CAPEX coming at 125 acre
  2. To enter the Fluorination process to create advanced intermediates for life science products
  3. FY 21 investments
  4. Deepak Nitrite: 350 cr
  5. Deepak Phenols: 750 cr
  6. R&D spends is up 2-3X
Brownfield expansion of IPA is also nearing completion which will double our IPA capacity to 60,000 MTPA. Probably it will available in Q2FY22.

Capex Programmes 

  • We have committed around ` 300 Crores towards new products in the immediate future at newly acquired land at Dahej. In addition to this, 
  • another amount of around ` 100 Crores has been committed in various brownfield expansions of existing products. We are also doubling IPA capacity at our Dahej (DPL) plant.

Management Plans

  1. Based on the encouraging demand trajectory, we have initiated key capex projects during the fiscal. This includes land development at our newly acquired Dahej site, comprising 55 acres out of total 127 acres in the first phase. This facility will support capacity enhancement for key products in the standalone business. 
  2. Brownfield expansion of IPA is also nearing completion which will double our IPA capacity to 60,000 MTPA, and other existing products are being expanded inline with market growth. 
  3. Forward integration projects based on phenol and acetone is currently being finalized, and shall be launched soon. 
  4. In another important development, we will be investing around ` 300 Crores into new products based on environmentally friendly technologies for agrochemical and pharmaceutical intermediates. 
  5. We are also in the process of building a world-class Technology Centre at Vadodara which will further strengthen our R&D and piloting capabilities. 
  6. In terms of our technology platforms, we have further developed our competency in nitration, reduction and diazotization – and also added new platforms like fluorination and photochlorination.

Deepak Nitrite Concall Snippets (Q1FY22)-:

  1. New capex of 300Cr in Deepak Nitrite for Lifescience Chemicals with end-use in pharma and agrochemicals.
  2. New capex of 700cr in Deepak phenolics will be downstream and having applications in paints and coatings.
  3. Both import substitutes.
  4. Demands growing at very high rates in both the products they will be developing. 
  5. They will domestically be #1 in those segments.
  6. Also adding platforms of Fluorination and photochlorination to their existing platforms. These will work in synergies with current platforms.
  7. Process intensification and Product development are the key pillars for continuous margin improvement and gaining relevance globally.
  8. A lot of opportunities are coming but will invest only in those projects where we have a high degree of certainty in succeeding and synergies.
  9. Fine and Specialty business margins were affected due to high freight costs as a lot of exports from that division and in some contracts freight is on their end.
  10. DASDA prices have started to normalize.
  11. Asset turns of minimum 2x in our every project.
  12. We are in discussions with couple of global innovators  for long term contract opportunities. Will inform when something finalizes.
  13. There will be fungibility in all our new projects.We will be able to make several products and they will be decided according to mkt scenario.
  14. *Our goal is to use 35% of our phenol capacity captively. There is also scope of debottlenecking for phenol.
  15. *Brownfield projects not included in current capex guidance.
  16. *IPA capex will contribute from Q3.
  17. *Will get in only those products where they can be among top 3 globally