Multibagger alert: Rs 1 lakh invested in this chemical stock would have given you Rs 24 lakh in five years.

resr 5paisa Research Team 11th December 2022 - 04:06 am
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Long-term investors have made a huge profit by investing in Deepak Nitrate as it has surged by 2,304% in the last five years.

The stock of multibagger Deepak Nitrate rallied from Rs 808 to Rs 2,886 and gained 192% since the beginning of this year. The stock has risen 260% in the past year.

Long-term investors have made a huge profit by investing in this chemical stock as it has surged 2,304% in the last five years which is 24x times the invested amount. Rs 1 lakh invested in 2016 would have become Rs 24 lakh in 2021.

Deepak Nitrite is one of the leading suppliers of chemical intermediates. It has a diversified portfolio of the intermediate, which is used in dyes and pigments, agrochemical, petrochemical, pharmaceutical, plastics, textiles, paper and home and personal care segments in India and overseas.

In the last five years from FY16 to FY21, revenue has grown at a CAGR of 20% and profit has grown at a CAGR of 55% which shows the steep growth of the company.

There is a tremendous increase in operating profit margin from 10% in FY16 to 27% in FY21, due to proper backward integration and forward integration. In doing so, they saved a lot of cost from raw materials which is used for manufacturing.

Global companies are trying to reduce dependency on China since various factories in that country can’t operate due to power shortages. This is a positive macroeconomic factor for chemical companies operating in India.

Deepak Nitrate has a market leadership across product segments, they are the leading producer of sodium nitrite in the world and one of the top three global players in fine and speciality chemicals.

The company has strong management with Deepak Mehta, the chairman of the company who has 40 years of industry experience and his son Maulik Mehta as the CEO, who has 10 years of industry experience and exceptional academic background.

Though stock had a massive rally in the past, do you still think the company can utilize the present situation and gain momentum?.

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