Deepak Nitrite (Ac­cu­mu­late)

The Hindu Business Line - - STOCKS -

CMP: ₹220.25

Tar­get: ₹251

Sorted into ba­sic chem­i­cals, fine & spe­cial­ity chem­i­cals (FSC) and per­for­mance prod­ucts, Deepak Nitrite Ltd’s prod­uct port­fo­lio com­prises or­ganic, in­or­ganic and fine chem­i­cals — for use in de­ter­gents, col­orants, pa­per, agro chem­i­cals, rub­ber, etc.

The stock cur­rently trades at 32.9x FY18e EPS of ₹6.50 and 20.5x FY19e EPS of ₹10.45. Re­cov­ery in earn­ings this fis­cal partly rests on sus­tained firm­ness in crude oil mar­kets and res­ur­rec­tion in exports of key FSC in­ter­me­di­ates. Widen­ing on newer re­gions (Europe for in­stance) and end-user in­dus­tries with patented prod­ucts for per­for­mance prod­ucts seg­ment is aimed at cur­tail­ing losses. Yet vul­ner­a­bil­ity of earn­ings to near un­pre­dictabil­ity of mar­ket reach with re­gards to phe­nol and ace­tone ca­pac­i­ties can­not be sorely gain­said. We, there­fore, as­sign ‘ac­cu­mu­late’ rat­ing on the stock with re­vised tar­get of ₹251 based on 24xFY19 earn­ings, over a pe­riod of 6-9 months.

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