Deepak Nitrite Ltd Q2FY26: When Chemistry Meets Comedy—Revenue Slides, Capex Booms, and Phenol Still Rules the Lab

1.At a Glance

Deepak Nitrite Ltd, the ₹23,374 crore midcap chemistry wizard, just dropped its Q2FY26 numbers—and the reaction was as mixed as a school kid’s first chemistry experiment. Sales for the quarter were ₹1,902 crore, down 6.4% year-on-year, and PAT came in at ₹119 crore, down a sizzling 38.9%. Even the EPS slipped to ₹8.7, leaving analysts mumbling “titration error.” The stock, currently priced at ₹1,714, has burned 36% over the past year, proving that volatility isn’t just for lab acids. With an ROCE of 16.3% and ROE of 13.4%, the company still has enough energy in the molecule, but the market clearly wants more heat.

The Bhagavad Gita says,“You have the right to perform your duty, but not to the fruits of your action.”Deepak Nitrite seems to have taken that too seriously—it’s doing all the hard chemical work, but the fruits (a.k.a. profits) have evaporated faster than acetone.

Still, with seven plants, a 50%+ market share in Phenol and Acetone, and an ambitious ₹14,000 crore capex pipeline, this Baroda-based chemical alchemist is playing the long game.

2.Introduction

Remember those kids in school who loved chemistry but couldn’t handle physics or math? Deepak Nitrite is their corporate reincarnation—great chemistry, poor balance (in earnings). Incorporated in 1970, this company has morphed from a humble chemical manufacturer to India’s chemical multiverse—intermediates, phenolics, acetone, and now polycarbonate dreams worth ₹5,000 crore.

But here’s the twist: despite making half the phenol in India, Deepak Nitrite’s own profits are looking diluted. FY25 saw a 33% drop in PAT, even though sales stayed strong at ₹7,875 crore. The market has been ruthless—stock P/E of 44 vs. industry P/E of 29.3 is like paying fine-dine prices for street food quality performance.

Yet, the company remains a chemist’s dream—integrated operations, a wide client base (Bayer, Unilever, RIL, L’Oreal—basically half your bathroom shelf), and an R&D arm working overtime to make sure India doesn’t depend on China for every molecule.

So, is Deepak Nitrite’s slowdown just a temporary reaction, or are we witnessing a permanent chemical imbalance? Let’s mix the data and find out.

3.Business Model – WTF Do They Even Do?

In simple terms, Deepak Nitrite sells chemistry. Lots of it. From phenol for laminates to acetone for paints and IPA (isopropyl alcohol) for sanitizers—basically, if it smells industrial and stings the nose, they probably make it.

The business runs on two beakers:

1. Phenolics (70% of revenue)– The rockstar segment. Deepak Phenolics produces Cumene, Phenol, Acetone, Isopropyl Alcohol, and Alpha Methyl Styrene. This part of the business serves everyone from pharma companies to plywood makers. It’s cyclical, volatile, and still the moneymaker.
2. Advanced Intermediates (30%)– The nerdy cousin that deals in nitrites, xylidines, and oximes. These compounds go into dyes, rubber, agrochemicals, and pharma. When this side sneezes, global supply chains catch a cold. Unfortunately, this segment saw a 9% YoY drop in 9M FY25 due to destocking in international markets.

Geographically, 84% of revenue comes from India—because apparently, Indians love phenol as much as they love discount sales.

So yes, they’re a B2B chemical factory—but given the diversification, it’s safe to say Deepak Nitrite makes “everything except food.”

4.Financials Overview

If EPS were a cricket score, Deepak Nitrite would have gone from Virat Kohli form to middle-order collapse in one quarter. Operating margins crashed from 15% to 11%, which in chemical terms means “solvents turned toxic.”

5.Valuation Discussion – Fair Value Range