The results for my second largest company in my PF(approx 23 percent) ie Deepak Nitrite are out.
My main tracking point with them is always how well they juggle their products 4 divisions in tricky environments. This is just a WIP and i will flesh it out post the concall
Basic chem is back on track post covid even in an inflationary environment has maintained good growth and margins which i wasn’t really expecting.
Speciality chem has grown well and is the main division i track. Margins at 33 percent too vs the fall to 26 last quarter. Very happy with this.
Performance products is the joker in the pack. Post it’s near zero contribution last year it looks like it’s stabilising over the past 2 quarters. We saw the base last year and know high this can go in favorable conditions.
Phenolics continues increasing revenue contribution… but as expected margins have fallen a bit so we could be reaching a small down cycle here.
Overall, it will be interesting to see how the next few quarters play out here. Is it overvalued at CMP? I honestly don’t know. I haven’t really added to my Allocation since rs. 600 so i have a big margin of safety here to accommodate for a down cycle in phenolics and PP and it’s a company il be holding for years to come since I’m comfortable with the way they navigate the commodity cycles. I would just like to add this: it still blows my mind that just 2 years ago everyone was tracking dasda prices and the fate of deepak nitrites stock prices depended on dasda + a few commodity chemicals. Fast forward two years and we ve reached a point where dasda prices don’t really matter on the downside anymore (but will definitely contribute on the upside) and they have a stable, growing spec chem engine and a monster in phenolics(though upside here could be capped for a bit until downstream products come in). All in just the last 2 years . Not only did they not collapse post dasda price collapse… but they’ve grown their profits to 1000+ crores per year too. I would give a long rope to this kind of management since they are masters at their game.
Anyways , The concall will tell me more.