1. At a Glance
Deepak Nitrite Ltd, once the poster boy of specialty chemicals in India, has seen margin compression, capex splurges, and investor emotions swing like a pendulum. From explosive multibagger to “meh”, is DNL still a compounder or just a cautionary tale?
2. Introduction with Hook
Imagine you’re at a party and someone yells “multibagger!” — back in 2020-21, chances were they were talking about Deepak Nitrite. But like every viral sensation, it now sits nursing a soda in the corner while others dance.
- Sales: ₹8,282 Cr in FY25 (flat for 2 years)
- Net Profit: ₹697 Cr (down from ₹1,067 Cr in FY22)
- ROCE: 17% (once upon a time, was 44%)
- Stock down ~29% in 1 year
When your P&L goes from phenol to phone-it-in, something’s up.
3. Business Model (WTF Do They Even Do?)
DNL operates in three main verticals:
- Basic Intermediates – Acetone, Nitro Toluene etc.
- Fine & Specialty Chemicals – Pharma & agro intermediates
- Performance Products – Xylidines, Cumidines
- Phenolics (through 100% subsidiary DPL) – Phenol, Acetone, IPA
Phenolics contribute ~60% to revenue, but are margin-light. Specialty chemicals are margin kings, but slower to scale.
Customers range from pharma giants to agro-chem firms and FMCG titans. But pricing power? That’s now just a fond memory.
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹7,972 Cr | ₹7,682 Cr | ₹8,282 Cr |
| EBITDA | ₹1,292 Cr | ₹1,127 Cr | ₹1,092 Cr |
| Net Profit | ₹852 Cr | ₹811 Cr | ₹697 Cr |
| OPM % | 16% | 15% | 13% |
| ROCE | 30% | 22% | 17% |
| EPS | ₹62.47 | ₹59.45 | ₹51.12 |
Margins and profit have been on a yoga retreat – they’ve gone inward and haven’t come back.
5. Valuation
| Metric | Value |
|---|---|
| CMP | ₹1,976 |
| P/E | 38.6x |
| Book Value | ₹395 |
| P/B | 5.0x |
| Dividend Yield | 0.38% |
Fair Value Range (based on 20x–28x P/E) = ₹1,020 – ₹1,430
Currently trades at a premium to its earnings, but markets are pricing in a capex-driven comeback.
6. What’s Cooking – News, Triggers, Drama
- ₹5,000 Cr capex plan over 3 years for new greenfield facilities and capacity expansion
- Commissioned a new Fine & Specialty Chemicals plant in Dahej
- DPL (Phenolics arm) issued ₹55 Cr OCRPS to Deepak Nitrite for project financing
- Leadership changes in 2025 — new independent directors and a tech head exit
- Weak demand in Phenol dragging growth
- Operating leverage not kicking in yet, post capex
In short: lots of promises, fewer profits. For now.
7. Balance Sheet 💰
| Item | FY25 |
|---|---|
| Equity Capital | ₹27 Cr |
| Reserves | ₹5,361 Cr |
| Borrowings | ₹1,267 Cr |
| Total Liabilities | ₹7,718 Cr |
| Fixed Assets | ₹2,457 Cr |
| CWIP | ₹1,649 Cr |
| Investments | ₹511 Cr |
| Cash & Equivalents | ₹60 Cr |
💡 Takeaway: Capex is visible (CWIP exploded). Debt inching up but still manageable. Low D/E ratio.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹650 Cr | -₹276 Cr | -₹359 Cr | ₹15 Cr |
| FY24 | ₹878 Cr | -₹721 Cr | ₹44 Cr | ₹200 Cr |
| FY25 | ₹625 Cr | -₹1,491 Cr | ₹806 Cr | -₹60 Cr |
Investments sucking cash like a Dyson. Financing includes debt and OCRPS to support capex. But core business still cash-generative.
9. Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 13.7% |
| ROCE | 16.6% |
| OPM | 13% |
| D/E | 0.24 |
| EPS | ₹51.12 |
| P/E | 38.6x |
| P/B | 5.0x |
Used to be sexy. Now mostly stressed — but with potential for a glow-up post FY26.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT | OPM | NPM |
|---|---|---|---|---|---|
| FY23 | ₹7,972 Cr | ₹1,292 Cr | ₹852 Cr | 16% | 11% |
| FY24 | ₹7,682 Cr | ₹1,127 Cr | ₹811 Cr | 15% | 10.5% |
| FY25 | ₹8,282 Cr | ₹1,092 Cr | ₹697 Cr | 13% | 8.4% |
Revenue up. Profits down. Margins in a coma. Classic post-capex hangover?
11. Peer Comparison
| Company | P/E | ROE | OPM | Mcap (₹ Cr) |
|---|---|---|---|---|
| Deepak Nitrite | 38.6x | 13.7% | 13% | ₹26,946 |
| Gujarat Fluoro | 69.5x | 8.3% | 24.4% | ₹37,932 |
| Atul | 45.1x | 9.1% | 16.4% | ₹21,968 |
| Navin Fluorine | 87.3x | 11.5% | 22.7% | ₹25,188 |
| Vinati Organics | 48.9x | 15.8% | 26% | ₹20,300 |
Peers are richer in valuation and margin, but DNL offers diversification and proven execution history.
12. Miscellaneous – Shareholding, Promoters
| Category | % Holding (Jun 2025) |
|---|---|
| Promoters | 49.28% |
| FIIs | 6.68% |
| DIIs | 22.61% |
| Public | 21.42% |
| Shareholders | 4.16 lakh |
Solid institutional presence. Retail gradually declining — perhaps reacting to stagnation?
13. EduInvesting Verdict™
Deepak Nitrite is a veteran of India’s chemicals bull run. The capex is aggressive, the product basket is solid, and the leadership is credible. But the market has moved from hope to delivery mode.
Until the high-margin specialty chemical projects go live, margins will stay pressured, and investor excitement will stay muted.
⚠️ It’s no longer the sprinter it used to be — it’s now a marathon runner, with weights tied to its ankles (phenol prices).
Verdict: Keep your eyes peeled for FY26 margin recovery. Right now? This multibagger is just marinating.
Metadata
– Written by EduInvesting Team | 15 July 2025
– Tags: Deepak Nitrite, Specialty Chemicals, Phenol Prices, Capex Cycle, Chemical Stocks India, Multibagger Pause Mode
