DEEPAKNTR - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.7

📊 Core Financials

Earnings & Profitability: EPS of ₹17.9 and PAT of ₹30.3 Cr (down 52% QoQ) reflect a sharp earnings contraction. ROCE at 10.1% and ROE at 8.22% are modest, indicating underutilization of capital.

Debt Profile: Debt-to-equity of 0.02 — virtually debt-free, which is a major strength in a cyclical industry.

Cash Flow: While not explicitly stated, low leverage and historical profitability suggest stable operating cash flows, though recent earnings softness may impact near-term liquidity.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 102 Extremely overvalued vs. industry PE (33.9)

P/B Ratio ~7.93 High premium over book value

PEG Ratio -5.17 Negative PEG flags serious growth concerns

Dividend Yield 0.41% Minimal income play

Valuation is stretched, and the negative PEG ratio suggests the current price may not be justified by earnings trajectory.

🧪 Business Model & Competitive Advantage

Deepak Nitrite Ltd. is a diversified chemical manufacturer with operations across

Basic Chemicals: Sodium nitrite, nitric acid

Fine & Specialty Chemicals: Agrochemicals, pharmaceuticals

Performance Products: Optical brighteners, fuel additives

Phenolics Segment: Acetone, phenol, IPA — key drivers of margin expansion

Despite recent earnings pressure, analysts expect a 22% annual earnings growth over the next three years, outpacing the market’s 19% forecast

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. This optimism stems from Deepak’s strong market position in sodium nitrite and nitrotoluenes, and its strategic expansion into high-margin segments

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📈 Technical & Sentiment Indicators

RSI: 53.7 – Neutral zone, suggesting balanced momentum.

MACD: -14.1 – Bearish crossover, indicating short-term weakness.

Volume Dip – Significantly below weekly average, signaling reduced interest.

DMA 50 & 200: Price is below both, confirming a bearish undertone.

The stock is down ~40% from its 52-week high, reflecting investor caution amid earnings volatility

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹1,730–₹1,780, near recent support and 52-week low.

Current Price ₹1,816: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Hold with Caution or Accumulate on Dips: Strong product portfolio and low debt make Deepak Nitrite a potential long-term play, but elevated valuation and earnings pressure warrant disciplined entry.

Watch Margin Recovery & Institutional Sentiment: DII outflow (−0.61%) and weak MACD suggest short-term caution.

You can explore Simply Wall St’s earnings outlook and valuation breakdown or review Deepak Nitrite’s share price targets through 2030 for deeper insights. Let me know if you'd like a peer comparison with Aarti Industries or Navin Fluorine.

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simplywall.st

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shareprice-target.com

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www.indmoney.com

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