Deepak Nitrite Gets 'Add' Rating As ICICI Securities Initiates Coverage — Here's Why 

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HDFC Securities Institutional Equities

We initiate coverage on Deepak Nitrite Ltd. with an Add rating, and a target price of Rs 2,120, valuing it at 30x FY27E PE. While Deepak Nitrite generates strong operating cashflow, it has embarked on large capex into import substitution products – to be the crux of its sustained value creation in the medium term. Despite Deepak Nitrite’s large portfolio of bulk chemicals, we assign a higher multiple given its:

1. prowess in executing large projects and achieving lowest-cost manufacturing efficiency while capturing dominant market share; and

2. ability to identify good import substitution opportunities, and cater to the swiftly growing Indian market.

We expect Deepak Nitrite’s revenue/Ebitda/PAT to grow at CAGR of 15%/21%/22% over FY25–27E; FY28 onwards, the financials will likely leapfrog with Deepak Nitrite’s foray into polycarbonate-integrated facility.

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