Chemical stock hits fresh record high, gives multibagger return in 2022 so far
Deepak Fertilisers shares have given multibagger return of more than 107% in 2022 (YTD) so far
PremiumShares of Deepak Fertilisers and Petrochemicals Corporation Limited extended gains as the stock continued to hit upper circuit level on the BSE from the past few sessions. Deepak Fertilisers shares hit fresh record high level of ₹838 apiece in Thursday's trading session as the stock has been in gaining momentum after its Q1 FY23 earnings announced last week, and has surged 23% in the last five trading sessions.
Deepak Fertilisers posted an over three-fold jump in consolidated net profit to ₹435.6 crore in the first quarter ended June quarter on strong sales as compared to ₹130.6 crore in the year-ago period.
The company's total income increased by over 59% to ₹3,042 crore in the April-June period as against ₹1,908 crore in the same quarter last year. Expenses remained higher at ₹2,392.8 crore during Q1 FY23 as compared to ₹1,717.5 crore year-on-year (YoY).
Its operating EBITDA margins increased to 24.3% in Q1 FY23 from 15.2% in Q1 FY22. The company said that its robust top line growth and margin enhancement primarily driven by the chemical segment.
Deepak Fertilisers' Chairman and Managing Director (CMD) Sailesh C Mehta said that long-term growth of the company is expected to be underpinned by change in product mix, head room availability of additional capacities emerging from better operational management and de-bottlenecking along with greenfield expansions.
"We assume a healthy moderation in spreads in the subsequent quarters and a peak net debt of Rs33bn as at Mar-23. However should current spreads sustain peak net debt could be lower as there could be Rs3-4bn upside risk to our FY23 EBIDTA estimates. At only 10x FY24ii P/E, we continue to find the stock undervalued. Commissioning of the ammonia and TAN projects will drive medium term growth," said brokerage house IIFL in a note on Deepak Fertilisers post Q1 results.
Deepak Fertilisers and Petrochemicals Corporation Ltd. (DFPCL) is among India's leading producers of fertilisers and industrial chemicals. Deepak Fertilisers shares have given multibagger return of more than 107% in 2022 (YTD) so far, meanwhile the chemical stock is up about 72% in a year's period.
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