Deepak Nitrite Ltd: At a Crossroad After a Decade-long Rally
🔍Technical Analysis
Deepak Nitrite has experienced an extraordinary rally over the past decade—from below ₹100 to a peak near ₹3,000 in October 2021. The ₹3,000–₹3,200 zone has repeatedly acted as resistance, while the ₹1,700–₹1,800 range has served as a strong support zone. Currently, the stock trades around ₹1,760, hovering near that support.
Lately, fundamentals have decelerated: after years of strong growth until ~2022, the company has faced negative year-on-year profits in recent periods. This makes the current technical zone even more critical: any push above ₹2,000 could reignite a rally, but entry should be confirmed with improving financials.
Targets:
Target 1: ₹2,300
Target 2: ₹2,600
Target 3: ₹3,000
If the ₹1,700–₹1,800 zone fails to hold, the bullish thesis would be invalidated—expect limited upside in that case.
💰FY25 Financial Highlights (vs FY24 & FY23)
🧠Fundamental Highlights
The company has committed to a ₹8,500 Cr investment in PC resin/phenol capacity, aiming to vertically integrate and reduce dependency on external suppliers.
FY25 saw an 8% rise in revenue, reaching ₹8,366 Cr. However, net profit dropped ~14% to ₹697 Cr due to cost pressures.
Margins under stress: Gross margins compressed as input costs increased—impacting profitability despite revenue gains.
Valuation & Sentiment: JM Financial continues to rate Deepak Nitrite as a Buy, keeping the target at ₹2,305 amid expectations of turnaround.
Dividend & Financial Position: The company retains modest dividend payouts (~0.4% yield) with a payout ratio around 13%.
Balance Sheet: In FY25, a significant jump in long-term debt to ₹1,267 Cr raised leverage risks vs prior years.
✅Conclusion
Deepak Nitrite is perched at a pivotal level. While its long-term technical setup still holds promise, recent financial trends introduce caution. A break above ₹2,000 with improving fundamentals could trigger new upside, but a failure of the ₹1,700–₹1,800 support zone would cast doubt on future growth.
Deepak Nitrite has experienced an extraordinary rally over the past decade—from below ₹100 to a peak near ₹3,000 in October 2021. The ₹3,000–₹3,200 zone has repeatedly acted as resistance, while the ₹1,700–₹1,800 range has served as a strong support zone. Currently, the stock trades around ₹1,760, hovering near that support.
Lately, fundamentals have decelerated: after years of strong growth until ~2022, the company has faced negative year-on-year profits in recent periods. This makes the current technical zone even more critical: any push above ₹2,000 could reignite a rally, but entry should be confirmed with improving financials.
Targets:
Target 1: ₹2,300
Target 2: ₹2,600
Target 3: ₹3,000
If the ₹1,700–₹1,800 zone fails to hold, the bullish thesis would be invalidated—expect limited upside in that case.
💰FY25 Financial Highlights (vs FY24 & FY23)
- Total Income: ₹8,282 Cr (↑ ~7.8% vs ₹7,682 Cr; ↑ ~8% vs ₹7,972 Cr)
- Total Expenses: ₹7,682 Cr (essentially flat vs FY24; declined vs FY23)
- Profit Before Tax: ₹953 Cr (↓ vs ₹1,102 Cr in FY24; ↓ vs ₹1,146 Cr in FY23)
- Profit After Tax: ₹697 Cr (↓ from ₹811 Cr in FY24 and ₹852 Cr in FY23)
- EPS: ₹51.12 (down from ₹59.45 in FY24 and ₹62.47 in FY23)
🧠Fundamental Highlights
The company has committed to a ₹8,500 Cr investment in PC resin/phenol capacity, aiming to vertically integrate and reduce dependency on external suppliers.
FY25 saw an 8% rise in revenue, reaching ₹8,366 Cr. However, net profit dropped ~14% to ₹697 Cr due to cost pressures.
Margins under stress: Gross margins compressed as input costs increased—impacting profitability despite revenue gains.
Valuation & Sentiment: JM Financial continues to rate Deepak Nitrite as a Buy, keeping the target at ₹2,305 amid expectations of turnaround.
Dividend & Financial Position: The company retains modest dividend payouts (~0.4% yield) with a payout ratio around 13%.
Balance Sheet: In FY25, a significant jump in long-term debt to ₹1,267 Cr raised leverage risks vs prior years.
✅Conclusion
Deepak Nitrite is perched at a pivotal level. While its long-term technical setup still holds promise, recent financial trends introduce caution. A break above ₹2,000 with improving fundamentals could trigger new upside, but a failure of the ₹1,700–₹1,800 support zone would cast doubt on future growth.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.