Deepak Nitrite shares sink 13% as Q3 profit halves, margin pressures mount

ETMarkets.comLast Updated: Feb 14, 2025, 10:51:00 AM IST

Synopsis

Deepak Nitrite shares plummeted 13.4% after reporting a 51.5% YoY net profit decline to Rs 98 crore in Q3, with revenue falling 5.3% YoY. EBITDA slumped 44.7%, while margins contracted due to higher costs. The stock has dropped 32% in six months, but analysts see 35% upside, with a Rs 2,622 target price.

Shares of Deepak Nitrite tumbled as much as 13.4% on Friday to Rs 1,936.6 on the BSE after the chemical manufacturer reported a 51.5% year-on-year slump in net profit to Rs 98 crore for the third quarter ended December, compared to Rs 202 crore in the year-ago quarter.

Revenue for the December quarter fell 5.3% YoY to Rs 1,903.4 crore from Rs 2,009.2 crore, reflecting weak demand across key segments.

Earnings before interest, tax, depreciation, and amortization (EBITDA) plummeted 44.7% YoY to Rs 168.5 crore, while operating margins contracted to 8.9% from 15.2% a year ago. Higher raw material costs and lower realizations weighed on profitability, compounding concerns over the company’s near-term outlook.

A major supplier of intermediates to industries such as agrochemicals, paints, and pharmaceuticals, Deepak Nitrite has been grappling with subdued demand and margin pressures.

The stock has shed 13% in the last year, extending its losses to 18.6% over the past week alone. Over the last six months, shares have plunged nearly 32%.

Despite the selloff, Trendlyne data indicates a consensus target price of Rs 2,622, implying a potential upside of over 35% from current levels. Of the 17 analysts tracking the stock, six have a "buy" rating, five suggest "hold," and six recommend "sell."

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