Deepak Nitrite Q4 Results Review: Execution Remains The Key; Systematix Maintains 'Hold'

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Systematix Report

Deepak Nitrite Ltd.’s Q4 FY25 result beat estimates, driven by sharp sequential recovery in the Phenolics segment and overall robust volumes. Consolidated revenue of Rs 21.8 billion (+3% YoY, +15% QoQ) was 11% above our estimate. Gross margin, although flat YoY, expanded by sharp 380bps QoQ to 30.6% (estimate of 30%). Ebitda surged 88% QoQ and 5% YoY to Rs 3.2 billion (50% above estimate), with Ebitda margin expanding 567 bps QoQ and 36 bps YoY to 14.5% on improved operational performance. Deepak Nitrite’s Advanced Intermediates segment revenue fell 3% YoY but rose 19% QoQ to Rs 6.5 billion, although Ebit margin contracted by 1,20bps YoY, but was up 381bps QoQ to 6.9%.

Phenolics posted 5%/12% YoY/QoQ revenue growth, with Ebit jumping 16% YoY, causing significant 156 bps YoY expansion in margin to 15.6%, as the company produced higher volumes.

Interest expenses soared 112% YoY and 53% QoQ to Rs 93 million. Reported PAT fell 20% YoY but was up 106% QoQ (56% above our estimate of Rs 1.3 bn) to Rs 2.0 bn due to the high base; the company had recorded an exceptional gain of Rs 798 mn in Q4 FY24.

Excluding exceptional items, APAT rose 16% YoY. Even though the company has recovered sharply, its major investment pipeline of ~Rs 85 bn into polycarbonate and other downstream products would decide its future trajectory.

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