They generally dont disclose chemical wise margins so will be difficult to get any idea on it. Besides margin for IPA will be a function of how much of it is being used in pharma and how much will it be for other applications.
With ethanol based sanitizers coming in demand for IPA may taper. This is my sense, not a fact and hence needs to be verified with numbers.
IPA is the downstream product for Acetone. they have announced a capex for the same .
@learning Thanks a lot for your valuable response. By going through this thread I came to know that Praj industries is one of the companies which is working on Ethanol-based sanitizers.
Q2 numbers looks good at first glance, can anyone comments if they have seen something in details?
Financial Highlights
Q2 FY2021 vs. Q1 FY2021 (q-o-q)
Standalone Revenues improved by 26% to Rs. 448 crore in Q2 FY21 as compared to Rs. 355 crore in Q1
FY21, during which we operated for only 2 months, as volume demand inched back toward normal from
key end segments. The company also increased focus on the export market. All the strategic business units
(SBUs) rebounded strongly to report double-digit growth.
On a Consolidated basis, Revenues were higher by 46% at Rs. 991 crore in Q2 FY21 compared to Rs. 681
crore in Q1 FY21 during which production was affected by about 1 month. Despite higher imports, DPL
delivered sustainable production in excess of 100% of capacity and identified key export markets in lieu of
domestic demand.
Standalone EBITDA was Rs. 139 crore in Q2FY21 as against Rs. 102 crore reported in the immediately
preceding quarter, registering growth of 36%. The EBITDA Margin improved by 230 basis points, from
28.8% in Q1 to 31.1% in Q2 of this year. This was due to a combination of operating
leverage across operations, improved margins in the FSC segment and
strategic procurement decisions on the back of attractive petrochemical
prices and availability.
Page 2 DNL – Q2 & H1 FY2021 INVESTOR COMMUNICATION
On a Consolidated basis, EBITDA was Rs. 280 crore in Q2 FY21
compared to Rs. 188 crore in Q1 FY21, higher by 49%. The significant
increase in utilisation of DPL plant combined with additional contribution
from IsoPropyl Alcohol have enabled sharp growth in EBITDA.
Standalone PBT for Q2 was Rs. 124 crore against Rs. 85 crore in Q1 FY21, growing by 46%
on a Q-o-Q basis buoyed by effective cash conversion recovery programs and current position as a debt free
company (standalone). On a consolidated basis, PBT grew by 73% to 229cr compared to the previous
quarter as margins remained sustainable while higher productivity and lower debt resulted in improved
returns.
Standalone PAT for Q2 was Rs. 92 crore as against Rs. 64 crore in Q1 FY21, growing by 45% on a Q-o-Q
basis. The robust operational performance coupled with lower interest costs has driven the growth in
profitability. On a Consolidated basis, PAT was Rs. 170 crore in Q2 FY21 compared to Rs. 99 crore in Q1
FY21, higher by 72% on the back of a robust performance by the phenolics business.
Standalone EPS for Q2 FY21 was Rs. 6.75 per share (of face value of Rs. 2 each) as compared to Rs. 4.66 per
share in Q1 FY21. Consolidated EPS for Q2 FY21 was Rs. 12.48 per share (of face value of Rs. 2 each) as
compared to Rs. 7.25 per share in Q1 FY21
Q2 FY2021 Vs. Q2 FY2020
Standalone Revenues declined by 22% to Rs. 448 crore as compared to Rs. 572 crore in Q2 FY20. Phased
recovery from lockdown and social distancing measures impacted utilisation levels on a y-o-y basis in the
standalone operations. Further, realisations in the PP segment were abnormally high in the same period
last year resulting in a high base effect. On a Consolidated basis, Revenues were Rs. 991 crore in Q2 FY21
compared to Rs. 1,011 crore in Q2 FY20. A stellar performance from the phenolics business despite
increased imports combined with additional contribution from IPA has enabled the company to
substantially recoup the shortfall in standalone revenues.
Standalone EBITDA was lower at Rs. 139 crore as against Rs. 216 crore reported in the corresponding
quarter of last year, de-growth of 35%. Accordingly, the EBITDA margin was 31.1% in Q2 this year
compared to 37.7% in Q2 of last year. Constraints on peak production at plants due to Covid-19 related
restrictions and the reversion of PP segment realisations from the abnormally high base of last year have
led to a moderation in the EBITDA margin, which remains robust at over 30%.
On a consolidated basis, EBITDA was Rs. 280 crore in Q2 FY21 compared to Rs. 258 crore in Q2 FY20,
higher by 8.1% on a y-o-y basis. A robust performance from the Phenolics business also enabled the
Company to report higher growth in Consolidated EBITDA on a y-o-y basis.
Standalone PAT for Q2 was Rs. 92 crore as against Rs. 179 crore in Q2 FY20, lower by 48%. On a
Consolidated basis, PAT was Rs. 170 crore in Q2 FY21 compared to Rs. 150 crore in Q2 FY20, higher by
13.3%. Strong performance in DPL coupled with contribution from entire basket of existing products has
driven the sharp growth in profitability.
Standalone EPS for Q2 FY21 was Rs. 6.75 per share (of face value of Rs. 2
each) as compared to Rs. 13.10 per share in Q2 FY20. Consolidated EPS for
Q2 FY21 was Rs. 12.48 per share (of face value of Rs. 2 each) as
compared to Rs. 11.03 per share in Q2 FY20.
Disclosure : Invested
Also from investor presentation:
Segmental Performance (Q2 FY21 Vs. Q2 FY20)
Basic Chemicals: While margins were sustained, topline suffered by 25% because of slow
pick up by end use segments such as textile, oil and fuel additives and also due to temporary supply
disruption. The company expects volumes and prices to pick up in upcoming months, with some traction
already underway in September, as demand from the dyes industry returns to pre-COVID levels.
Fine & Specialty Chemicals: The FSC segment delivered a stellar performance with revenue growth of 52%
y-o-y. The business remains a star performer although capacity utilization was affected partially by COVID-
19 related government mandates and short term challenges from shipping lines. The Business is supported
by a strong order book, thereby improving Q3 performance even better.
Performance Products: After having delivered an exceptional performance last year, the Company expected
a normalized performance this year particularly in terms of margins. The current pandemic, however, has
significantly impacted consumption thereby affecting volumes and margins. The company has seen signs of
recoveries in volume and expects to achieve a normalized performance as demand picks up worldwide.
Phenolics: Deepak Phenolics witnessed revenues increase by 26% y-o-y with EBITDA growth of 229%. New
products such as IPA contributed to an increase in the EBITDA Margin which at 25.6% in Q2FY21 was
sharply higher from 9.6% in Q2FY20. With manifold increase in exports, the Company was able to maintain
high capacity utilization. The business would continue to put effort in this direction. Despite consistent
challenges in interstate logistics for raw materials and finished goods, the team demonstrated admirable
agility in ensuring material movement. These challenges are not expected to show up in coming quarters.
Overall, imo this was a good performance and things are only going to get better every quarter. Story of specialty chem being the main growth driver with explosiveness of phenolics division with increased margins continues. Basic chem and performance products will improve as the quarters pass too. There’ll be an eps explosion soon as soon all 4 will click at the same time instead of just 1 or 2 segments outperforming atm.
Disc: invested since lower levels approx 20 percent of my portfolio
On first look, Deepak Nitrite results might look muted, but one has to see the results in context of abnormally high margins and profitability in DASDA in comparable quarter in previous year. In fact the situation in the performance products segment has gone totally in opposite direction with profitability coming down sharply.
The shining star in terms of results was the fine and speciality division. The products from this division cater to pharma and agrochem industries and hence the growth and profitability in this division looks likely to be sustainable. This provides some cushion to the volatility in other divisions namely performance products and phenol where margins can vary from quarter to quarter.
One interesting snippet from the presentation has been the formation of a new subsidiary to focus on chemical intermediates which again can be a good growth engine with high level of consistency and predictability once it starts a meaningful contribution.
The management seems to be proactive in trying to make this company into a strong company with improving business characteristics as compared to the earlier commodity nature of the business. Although it might take time for most triggers to play out, Deepak Nitrite seems one of the more interesting companies to study and track for consideration for long term investing.
disc: no positions as of now but remains in my watchlist.
Deepak Nitrite Q2FY21 Concall
I attended it live, there could be a mistake or 2
-This quarter we faced operational constraints due to covid and moreover last year we had exceptional returns from the PP segment.
-Ebitda margin for Deepak Phenolics was at 25%. Higher exports have helped to keep the utilization levels above 100%. We nearly quintupled our exports due to softness in the domestic business. Last year EBITDA margins were at 9.6% in the same quarter.
-Incorporated Deepak Clean Tech to manufacture intermediates. Will have similar process competencies that the company already has and have developed new ones to add to our kitty.
-Capex
-To be at 400 crores in FY21,will announce a considerably higher capex next year.
-Capex initiatives to be both greenfield and Brownfield.
-The new piece of land that we purchased last year, would be completely used for capex.
-F&S had stellar revenues and robust demand, contribution margin improved. Will focus on pharma intermediates which are one or two steps away from our current expertise and current product portfolio.
We have pretty sticky customers in F&S business. Entry barriers are very high and deep process expertise is required. Customers over a period of time have decided to depend more on Deepak as compared to few years ago.
-Expect to sustain 40-44% of EBIT margins in this line of business, both in the short term and the long term.
-In Deepak Green Tech, product range would be of known chemistry and the land that we acquired would be utilised.
-Strategy for product selection
-Process expertise,Downstream synergy and customer synergy. We always ask ourselves why should Deepak Manufacture this? We need to have strong conviction before entering new products.
-Basic chemicals business was impacted due to slowdown in Textile,oil,and fuel additives. Expect to reach precovid levels of utilization in Performace products next year.
We belive network effects are playing out in the Indian chemical industry where Deepak is likely to be the key beneficiary. As more and more countries are looking at India as a reliable partner, more spechem units are being established. Which in turn is leading to higher demand for products of Deepak Nitrite, as our products are used to produce the end product
My Views: Maulik Mehta sounded really confident and articulate in the concall.Just sounds and seems like a company that knows where it is headed.
Disclosure: Tracking Position.
Really forward looking management that walks the talk. I like the way they are setting up Deepak Clean/Green Tech keeping in mind that going forward, this would be key lever for companies.
Positives:
Like the company . Waiting for better prices around 650 level
A very interesting interview on the overall direction the company is headed in.
Disc: Tracking
But in e-commerce, packaging sector !
I couldn’t find the transcript of Con calls on it’s website. Any place to find the transcript?
Here^
Please check researchbytes and Trendlyne for concalls. Both of them are serving the investors well 
Deepak Nitrite
The Indian government extended anti-dumping duty on phenol imports from South Africa for 5 years. Deepak Nitrite has the largest phenol plant in the country.
A small writeup by about Deepak Mehta
DEEPAK NITRITE:
CO GETS EC APPROVAL FOR NANDESHRI PLANT, INCREASING CAPACITY BY ALMOST 150% - SOURCES
Bright future ahead.
There is no stock exchange notification, what is the source of information?
This is the link to search.
Below is the letter that is flying around but not to be seen in the official site yet
If you go through the EC; this is expansion of only 17cr… and heavy focus on basic chemicals…
Seems there would be short term pain as basic chemicals are built up which are lower margin (currently elevated due to cheap RM) and then they would build the downstreams post that. If investments are into basic chemicals then valuation down re rating could happen
In addition phenol acetone IPA prices crashing since December due to normalisation of demand of IPA which again could lead to near term pain.
Current valuations at peak with peak margins as well. Looking to sell and renter at attractive levels.
Deepak Nitrite will be added to f&o segment from March’21 series.
Lot size and required margin will be declared.
