Deepak Nitrite: Support Breakdown Signals Caution
🔍Technical Analysis
Deepak Nitrite Limited has experienced a super bullish rally over the past decade, transforming from below ₹100 to reaching ₹3,000 by October 2021 - representing an impressive 30x growth in just 10 years. However, the stock has since entered a prolonged consolidation and correction phase.
The ₹3,000-₹3,200 zone acted as formidable resistance twice, while the ₹1,700-₹1,800 zone provided strong support multiple times over the past few years. This created a well-defined trading range that held for an extended period.
Critical Development: The stock has now broken below the crucial ₹1,700-₹1,800 support zone and is currently trading at ₹1,625. This breakdown is technically significant and suggests the market has entered bearish sentiment.
Analyzing the Profit & Loss statements over the past 4 years reveals a concerning trend - while sales show positive year-on-year growth, EPS has been declining consistently (from ₹62.47 in FY23 to ₹51.12 in FY25), indicating margin compression and profitability challenges.
Current Recommendation: No buying opportunities at current levels. Wait for the stock to reclaim and sustain above ₹2,000 before considering long positions.
💰FY25 Financial Highlights (vs FY24 & FY23)
Deepak Nitrite faces significant headwinds despite strategic capacity expansion initiatives. The company reported Q4 FY25 PAT of ₹202 crore (down 20% YoY) with full-year FY25 PAT at ₹697 crore, reflecting a 14% decline from FY24's ₹811 crore. Revenue grew modestly by 8% to ₹8,282 crore, but profitability deteriorated due to persistent margin pressures.
The challenging Q3 FY25 witnessed PAT plummeting 51.5% YoY to ₹98 crore as the company faced a "perfect storm" of idled plants due to deferred demand, elevated raw material costs, and lower realizations. EBITDA margins contracted sharply to 7% in Q3 from 12.8% in Q2 FY25, indicating severe profitability challenges.
Market cap has declined 42.8% in one year to ₹21,258 crore, with the stock falling from 52-week high of ₹3,168.60 (August 2024) to 52-week low of ₹1,962.50 (February 2025). Prabhudas Lilladher downgraded the stock with 'Reduce' rating and ₹2,582 target price, citing commodity-driven business challenges.
Despite headwinds, the company is investing heavily in capacity expansion with ₹2,000 crore capex in FY25 for MIBK, MIBC, nitric acid, and enhanced nitration capabilities. Additionally, ₹8,500 crore investment is planned for polycarbonate resin production, positioning for long-term growth in material sciences.
Management expects profitability rebound from Q4 FY25 onwards with new projects commissioning and backward-forward integration providing operational resilience. The company has entered medium-term supply agreements aligning with expanded capacity and completed cost improvement initiatives for agrochemicals and dye intermediates.
✅Conclusion
Deepak Nitrite's decade-long bull run from sub-₹100 to ₹3,000 faces significant reversal with support breakdown to ₹1,625. Declining EPS trend (₹62.47 in FY23 to ₹51.12 in FY25) despite revenue growth signals persistent margin compression from elevated input costs and competitive pressures. The 42.8% market cap decline and analyst downgrades reflect bearish sentiment. While ₹2,000 crore FY25 capex and ₹8,500 crore polycarbonate investment provide long-term visibility, near-term challenges persist. Technical breakdown below ₹1,700-₹1,800 support suggests avoiding fresh positions until stock reclaims ₹2,000 level with sustained volume confirmation.
Disclaimer: This analysis is for educational purposes only. Please consult your financial advisor before making investment decisions. Stock markets are subject to risks.
Deepak Nitrite Limited has experienced a super bullish rally over the past decade, transforming from below ₹100 to reaching ₹3,000 by October 2021 - representing an impressive 30x growth in just 10 years. However, the stock has since entered a prolonged consolidation and correction phase.
The ₹3,000-₹3,200 zone acted as formidable resistance twice, while the ₹1,700-₹1,800 zone provided strong support multiple times over the past few years. This created a well-defined trading range that held for an extended period.
Critical Development: The stock has now broken below the crucial ₹1,700-₹1,800 support zone and is currently trading at ₹1,625. This breakdown is technically significant and suggests the market has entered bearish sentiment.
Analyzing the Profit & Loss statements over the past 4 years reveals a concerning trend - while sales show positive year-on-year growth, EPS has been declining consistently (from ₹62.47 in FY23 to ₹51.12 in FY25), indicating margin compression and profitability challenges.
Current Recommendation: No buying opportunities at current levels. Wait for the stock to reclaim and sustain above ₹2,000 before considering long positions.
💰FY25 Financial Highlights (vs FY24 & FY23)
- Total Income: ₹8,282 Cr (↑ +8% YoY from ₹7,682 Cr; ↑ +4% from FY23 ₹7,972 Cr)
- Total Expenses: ₹7,187 Cr (↑ +10% YoY from ₹6,555 Cr; ↑ +8% from FY23 ₹6,680 Cr)
- Financial Profit: ₹1,095 Cr (↓ -3% YoY from ₹1,127 Cr; ↓ -15% from FY23 ₹1,292 Cr)
- Profit Before Tax: ₹953 Cr (↓ -14% YoY from ₹1,102 Cr; ↓ -17% from FY23 ₹1,146 Cr)
- Profit After Tax: ₹697 Cr (↓ -14% YoY from ₹811 Cr; ↓ -18% from FY23 ₹852 Cr)
- Diluted EPS: ₹51.12 (↓ -14% YoY from ₹59.45; ↓ -18% from FY23 ₹62.47)
Deepak Nitrite faces significant headwinds despite strategic capacity expansion initiatives. The company reported Q4 FY25 PAT of ₹202 crore (down 20% YoY) with full-year FY25 PAT at ₹697 crore, reflecting a 14% decline from FY24's ₹811 crore. Revenue grew modestly by 8% to ₹8,282 crore, but profitability deteriorated due to persistent margin pressures.
The challenging Q3 FY25 witnessed PAT plummeting 51.5% YoY to ₹98 crore as the company faced a "perfect storm" of idled plants due to deferred demand, elevated raw material costs, and lower realizations. EBITDA margins contracted sharply to 7% in Q3 from 12.8% in Q2 FY25, indicating severe profitability challenges.
Market cap has declined 42.8% in one year to ₹21,258 crore, with the stock falling from 52-week high of ₹3,168.60 (August 2024) to 52-week low of ₹1,962.50 (February 2025). Prabhudas Lilladher downgraded the stock with 'Reduce' rating and ₹2,582 target price, citing commodity-driven business challenges.
Despite headwinds, the company is investing heavily in capacity expansion with ₹2,000 crore capex in FY25 for MIBK, MIBC, nitric acid, and enhanced nitration capabilities. Additionally, ₹8,500 crore investment is planned for polycarbonate resin production, positioning for long-term growth in material sciences.
Management expects profitability rebound from Q4 FY25 onwards with new projects commissioning and backward-forward integration providing operational resilience. The company has entered medium-term supply agreements aligning with expanded capacity and completed cost improvement initiatives for agrochemicals and dye intermediates.
✅Conclusion
Deepak Nitrite's decade-long bull run from sub-₹100 to ₹3,000 faces significant reversal with support breakdown to ₹1,625. Declining EPS trend (₹62.47 in FY23 to ₹51.12 in FY25) despite revenue growth signals persistent margin compression from elevated input costs and competitive pressures. The 42.8% market cap decline and analyst downgrades reflect bearish sentiment. While ₹2,000 crore FY25 capex and ₹8,500 crore polycarbonate investment provide long-term visibility, near-term challenges persist. Technical breakdown below ₹1,700-₹1,800 support suggests avoiding fresh positions until stock reclaims ₹2,000 level with sustained volume confirmation.
Disclaimer: This analysis is for educational purposes only. Please consult your financial advisor before making investment decisions. Stock markets are subject to risks.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.