This favourite pick of Saurabh Mukherjee has returned its investor 3x returns in the last 24 months
Deepak Nitrate has both strong business and great financials.
Deepak Nitrate has been one of the best performing chemical stocks during the last 2 years with price appreciation from Rs 500 two years back to today's level of Rs 1778, delivering a 255% gain. The stock also went as high as Rs 3000 during the same period.
Deepak Nitrite is involved in the business of manufacturing organic, inorganic, fine, and speciality chemicals. It also manufactures a wide variety of intermediates which have applications in industrial explosives, paints, cosmetics, polymers, and optical brighteners. The company has manufacturing facilities in Gujarat, Maharashtra, and Telangana states.
The company has leadership in Phenol/Acetone which contributes more than 70% to the revenue. Vinati, Calim, Valiant, and Clean Science are the few clients for Phenol business. Process innovation and backward-forward integration have helped the company to be the cost leader in many of its products. Recently, in the first week of June, the company’s Vadodara plant caught fire. The company’s Inventory was damaged, while plant & machinery remain unaffected. However, any loss to the firm will be recovered under insurance.
The company has strong financials and was able to deliver 38% CAGR revenue growth and a staggering 82% CAGR growth in net profit for the last 3 years. As per the March period ending, the company has great ROE and ROCE of 44.6% and 37.5%, respectively. The company is also debt-free.
China plus one strategy adopted by major countries, import substitution and disruption in China's supply chain were the main triggers for Deepak Nitrite to succeed in the last few years. Saurabh Mukherjee, who is the founder of Marcellus Investment Fund and a popular guest on many business channels, is one of the early investors in the company and he has been talking about Deepak Nitrate for the last few years.
Deepak Nitrate has a market capitalization of Rs 24,000 crore and its shares are trading at Rs 1780 on June 21 2022.
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