Deepak Nitrate stock jumps 4% after posting strong first quarter results

Shares of Deepak Nitrite Ltd. climbed up to 4 per cent on Tuesday after the company reported strong first-quarter earnings, showing improvement both quarter-on-quarter and year-on-year.

The company reported a net profit of ₹203 crore for the April-June period, marking a 35 per cent year-on-year growth primarily driven by the phenolic segment.

Deepak Nitrite's revenue increased by 22 per cent to ₹2,167 crore in the quarter, compared to ₹1,769 crore in the same quarter of June 2023. EBITDA rose by 47 per cent to ₹309 crore, with margins at 14.2 per cent for the reporting quarter.

The advanced intermediates segment experienced a slight growth of 1 per cent, reaching ₹713.69 crore compared to ₹708 crore during the same period last year. The phenolics segment grew by about 23 per cent to ₹1,452 crore in the reviewed quarter.

On the charts, Deepak Nitrite's stock is currently neither overbought nor oversold. Its relative strength index (RSI) is at 60.7. The stock has a one-year beta of 0.7, suggesting very low volatility.

Should you buy?

Global brokerage firm Morgan Stanley recently noted that Deepak Nitrite's latest and largest investment cycle could trigger the next phase of re-rating, akin to the fivefold 'value creation' experienced from 2016 to 2019.

The foreign brokerage stated that Deepak Nitrite is undergoing its biggest investment phase, evolving into India's largest integrated phenolics producer.

"Coinciding with this capex cycle is a bottoming of the base business, operational and volume enhancements and a strong balance sheet," the firm said.

Shares of Deepak Nitrite Ltd. were up by 3.32 per cent, trading at ₹3,051.40 each on the NSE. The stock has increased by over 23 per cent in 2024.

Deepak Nitrite shares are currently trading above their 10-day, 20-day, 50-day, 100-day, and 200-day moving averages but below their 5-day moving average.