Deepak Nitrite (DN) reported a strong operating performance on a low base. Its EBITDA surged 2.8 times year‑over‑year to INR5.4 billion, driven by a 3.5‑fold increase in EBIT from the Phenolic segment and an 89% rise in EBIT from the Advanced Intermediates (AI) segment.
The growth came from a better product mix, higher operating leverage and improved phenol and benzene spreads. These factors helped the company achieve higher margins than expected.
Considering the better‑than‑expected margin in the first quarter of FY27, analysts raised their FY27 and FY28 estimates by 20% and 9% respectively. They project a compound annual growth rate of 13% for revenue, 22% for EBITDA and 24% for PAT over FY26‑28.
Using a valuation of 24 times FY28 earnings per share, the target price is set at INR1,500. The recommendation remains a sell.