Target: ₹2,565

CMP: ₹2206.95

We believe Deepak Nitrite’s MoU for investment of ₹14,000 crore (₹12,500 crore for phenol/acetone downstream and INR 15bn for specialty) (to be completed by CY27) will put it in the league of chemical giants such as Covestro, Evonik, Huntsman, etc. With the help of its upcoming bulk chemicals (aniline, bisphenol A, polycarbonate, MMA) capacities, we believe Deepak will have an inherent advantage in the manufacturing of downstream specialty chemicals.

The company can, we think, completely substitute India’s imports with its upcoming capacities (except for Aniline). As per our calculations, in FY29-30, Deepak will be able to generate ₹2,300-3,300 crore EBITDA from phenol/acetone downstream investment and ₹400-500 crore EBITDA from specialty investment.

This could translate to ₹3,800 crore additional EBITDA in FY30 on top of ₹1,900 crore EBITDA in FY26E, resulting in a likely EBITDA of ₹5,700 crore in FY30 (assuming successful commercialisation). Ascribing a 1-year forward 11-12x EV/EBITDA multiple, Deepak’s EV could be ₹63,000-67,000 crore by Mar’29.

Hence, we believe that investors can make 16-17 per cent CAGR returns over the next 5 years. Given the lack of clarity around the funding and timeline, we keep our estimates unchanged. We re-iterate Buy with an unchanged Mar’25 TP of ₹2,565/share.

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