Sell Deepak Nitrite; target of Rs 1300: Motilal Oswal

What happened

Motilal Oswal reiterated its Sell rating on Deepak Nitrite and set a target price of Rs 1300. The company reported second-quarter EBITDA, or operating profit before interest, tax, depreciation and amortisation, of INR6.4b, up 3.1 times year on year, and the broker raised FY27 earnings estimates by 54%.

Confirmed

Global impact / market context

The report combines a sharply higher FY27 earnings forecast with a Sell rating, signalling that Motilal Oswal does not see the improved outlook as enough to justify buying the shares at its valuation. Its target price and assumptions can influence investor expectations, though they do not determine company results.

Analyst inference

The reported growth came from stronger Phenolics results amid import disruptions and healthy local demand, plus growth in Advanced Intermediates. These drivers helped lift quarterly operating profit, but the report expects FY28 estimates to remain largely unchanged, indicating a more measured view beyond FY27.

Confirmed

What to watch

1. Watch whether import disruptions and healthy domestic demand continue to support Phenolics realizations, meaning selling prices after adjustments, and the segment’s operating contribution. Analyst inference
2. Track whether Advanced Intermediates sustains market-share recovery and whether initial new-product contributions develop into a meaningful source of earnings growth. Analyst inference
3. Compare subsequent company results with Motilal Oswal’s raised FY27 earnings estimates and largely maintained FY28 estimates to see whether the stronger outlook is borne out. Analyst inference

Evidence

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