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HDFC Securities
Deepak Nitrite (Buy)
CMP: Rs 275
Target: Rs 312-333
Deepak Nitrite Ltd’s (DNL) foray into fuel additives in 2010 has been a revenue booster for the company when the market was at a nascent stage. In FY12, it achieved a turnover of almost Rs 100 crore in fuel additive business. Greenfield expansion at Dahej is a forward integration step for one of its Speciality Chemicals — DASDA. With the completion of this greenfield project at Dahej in February 2013, DNL has become the most integrated player in the world.
DNL is the market leader in sodium nitrite with a 65 per cent market share in India and in order to maintain its leadership position, the company has decided to go for expansion in its inorganic intermediates business. DNL is embarking on a new business segment that is of heat storage related Solar Salts. Considering the double digit-growth in the revenues and earnings from its business, diverse user industries, growth prospects of its end users, DNL is trading at an attractive valuation.
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