HomeLifestyleMultibagger Stock: How Deepak Nitrate became a Multibagger

Multibagger Stock: How Deepak Nitrate became a Multibagger

Highlights

The share price of Deepak Nitrate as on February 10, 2020 was Rs 459
The stock touched the level of Rs 3020 on October 18, 2021
Deepak Nitrate has emerged as a leader in the nitration process

New Delhi. Diamonds are judged by the jeweler, but there are some diamonds whose test is late. Deepak Nitrite is one such stock which has become 8 times its listing price. Currently this stock is trading around 2,250. The IPO of this company came in 1971, since then this stock has given excellent returns. JM Financial has given a target price of Rs 2,895 for this stock.

At the time of Corona, the price of this stock was Rs 459 on February 10, 2020, while on October 18, 2021, this stock touched the level of Rs 3020. This stock gave 6 times returns during the same period alone. At this time also this stock is trading above Rs 2,000.

slow but solid start
Deepak Nitrate came as a catalyst and then it changed the chemistry of the entire chemical industry. But the main reason behind the growth of this company is its management. The market capitalization of this company was 45 lakhs in 1970, which has increased to 39,000 crores today.

Also read- This stock is running at the speed of rocket, 7 lakhs made for 1 lakh in two years, today it ran 10% again

Setting up a chemical company is not everyone’s business. It takes a lot of time to set up a chemical company, but the company’s management not only made this company a diversity chemical company but also stood on its feet as a global player.

Benefit from China Plus One
The business of the chemical industry in India is estimated to reach $300 billion by 2025. In the last 5 years, the chemical industry has grown by 1.3 times the average GDP of the company. India is the sixth largest chemical market in the world. Deepak Nitrate has emerged as a leader in the nitration process.

China is the largest country of chemical companies in the world. During the 2009 Beijing Olympics, when chemical companies in China were closed, Deepak Nitrate got a chance to flourish. After 2010, the company decided to capex and after that the company became the largest producer of sodium nitrite and sodium nitrate in India. Deepak Nitrate’s product portfolio includes Intermediates, Organic Intermediates and Fine & Specialty Chemical. The company’s success has been that the management focused on manufacturing of solar salts and fuel additives apart from nitrates and nitrites. That is, the company kept diversifying its product portfolio from time to time.

phenol breath
In 2016, the company started production of phenol. At a cost of about 1,400 crores, the company formed a separate company by the name of Deepak Phenolics. The company benefited tremendously from phenol and acetone. Phenol is widely used in automobile, agri industry, pharma, rubber and paint. The decision to mass-produce such a complex chemical for the first time in India proved to be a game changer for Deepak Nitrate. In April 2020, the company commissioned a new plant with a capacity of 30,000 MPTA to manufacture Isopropyl Alcohol (IPA) from Acetone. After this chemical compound, Deepak Nitrate’s management proved that they will not shy away from taking any risk in bringing new products.

Apart from this, Deepak Nitrate also manufactures products like Sodium Nitrate, Sodium Nitrite, Nitro Toluidine, Fuel Additives, Nitrosyl Sulfuric Acid which are part of Basic Chemicals which gives revenue of about 17.31 percent. At the same time, the company also produces fine and specialty chemicals like Xylidines, Oximes, Cumidines, Specialty Agrochemicals.

adventure management
Management’s bold decisions have been behind the company’s growth. The company is doing capex of 700 crores for Solvent and 300 crores for Life Sciences products. The product diversification is behind the success story of Deepak Nitrate. The company has invested heavily in basic chemicals to phenolics, after which it has been able to generate free cash flow. The focus of the company has always been in producing such products which till now have been imported into the country. It is difficult to say whether investors will be able to make money in the coming times, but the Indian chemical industry will continue to do well, but despite having a commodity product portfolio, the company’s growth outlook is aggressive.

Tags: Multibagger stock, Share market, stock market

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