Reduce Deepak Nitrite; target of Rs 1419: Prabhudas Lilladher

What happened

Prabhudas Lilladher issued a research report on Deepak Nitrite with a “Reduce” recommendation and a target of Rs 1419. The report said Q2FY27 consolidated revenue rose 62% year on year to INR30.7bn, while the company commissioned several facilities at Dahej.

Confirmed

Global impact / market context

The report describes strong growth in Phenolics but weaker Advanced Intermediates profitability, as input and freight costs weighed on earnings. Management’s expected margin recovery depends on using new facilities more fully and improving older products, so execution and demand will shape future profits.

Analyst inference

The stated “Reduce” recommendation contrasts with the reported revenue growth, reflecting the report’s concerns about uneven performance between business segments. New capacity and the longer-term polycarbonate project could support growth, but the article gives no details on valuation assumptions behind the target.

Analyst inference

What to watch

1. Watch whether Advanced Intermediates EBIT margins move toward management’s 14–15% FY28 expectation, as that would indicate whether higher utilization and cost improvements are taking effect. Analyst inference
2. Track the polycarbonate project milestones: resin commissioning is targeted ahead of the integrated chain in FY29, with overall project execution expected in FY30. Confirmed
3. Follow input, duties, logistics and freight costs alongside customer volumes in Advanced Intermediates, since the report identifies them as factors behind its lower EBIT. Analyst inference

Evidence

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