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Prabhudas Lilladher Report
Deepak Nitrite Ltd. phenolics division likely stands impacted in the near term, due to demand-supply mismatch. Deepak Nitrite's manufacturing facility stands at ~300,000 million tonnes per annum phenol/acetone as of FY23.
We believe Ebit/kg declined from Rs 23.1/kg to Rs 15/kg over FY22-FY23 and estimate to be at Rs 15/kg thereafter.
The company is trading at ~34 times FY24 earnings per share of Rs 62.3/share.
We anticipate ~13% EPS compound annual growth rate over FY23-26E.
Considering largely commodity nature of business, we value the stock at 22 times September-25 EPS and retain ‘Reduce' rating with target price of Rs 1854 (earlier Rs 1803).
We are rationalising our estimates for FY26E, resulting in cut of 21% in EPS estimates.
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