Deepak Nitrite Shares Plummet 13% Following Q3 Earnings Slump
In a surprising turn of events, Deepak Nitrite Ltd (DNL) has seen a significant decrease in its share price, dropping by 13% after the release of their Q3 earnings report. This substantial decline has pushed the stock to hit a 52-week low, causing concern among investors and analysts alike. The company attributes this downturn to a variety of factors, including oversupply from China and deferred demand in key sectors, which have posed significant challenges for the business.
The EBITDA margin for Deepak Nitrite fell from 16% to 10% year-over-year, primarily due to increased raw material costs. This decline in profitability has led to a 51% drop in Q3 FY25 profit, amounting to ₹98 crore. Additionally, the company reported a 5% decrease in revenue, falling to ₹1,924 crore, and a 40% decrease in EBITDA, amounting to ₹190 crore. These figures underscore the impact of rising input costs, weak demand in agrochemical intermediates, and operational shutdowns on the company’s financial performance.
Despite these challenges, Deepak Nitrite remains hopeful for a resurgence in demand within the agrochemical sector. The company anticipates that domestic customers will resume their purchases in the upcoming quarter, signaling a potential turnaround in their fortunes. Moreover, Deepak Nitrite has made significant strides in expanding its product portfolio, with the introduction of four new products in Q3. The company is also forging ahead with its Nitric Acid and Polycarbonate Resin projects, with plans to complete these major expansions by FY28.
Chairman Deepak C. Mehta has expressed optimism regarding the future outlook of Deepak Nitrite, citing improved capacity utilization in phenolics and a gradual recovery in agrochemical intermediates as positive indicators. Mehta foresees a normalization of profitability starting from Q4 onwards, instilling confidence in both investors and stakeholders.
Overall, while the recent performance of Deepak Nitrite may have raised concerns in the market, the company’s strategic initiatives and positive outlook for future growth paint a promising picture for its long-term success. As the industry continues to navigate through challenges, Deepak Nitrite remains steadfast in its commitment to innovation, expansion, and sustainable profitability.
