Deepak Fertilisers zooms 50% in four weeks on strong demand outlook

The company expects their market leadership in key product segments and strong demand outlook to drive business growth and profitability.

Shares of Deepak Fertilisers & Petrochemicals Corporation (DFPCL) were locked 5 per cent upper circuit at Rs 974.95 and hit fresh record high in Tuesday's trade. Till 02:33 PM; a combined 810,000 equity shares changed hands against pending buy orders of 70,000 shares on the NSE and BSE.

In the past four weeks, the stock has zoomed 50 per cent on healthy earnings and strong demand outlook. In comparison, the S&P BSE Sensex was up 5 per cent. The stock soared 150 per cent in a year, as against 6 per cent rise in the benchmark index.

DFPCL is engaged in manufacturing of industrial chemicals (Nitric Acid, Iso Propyl Alcohol, Methanol and Carbon Dioxide) crop nutrition (Nitro Phosphate, Nitrogen Phosphorous Potassium variants, Water Soluble Fertilisers and Bentonite Sulphur) and mining chemicals (Technical Ammonium Nitrate).

That apart, the company has delivered a robust consolidated financial performance in FY22 on the back of their unique advantage of integrated operations and diversified end-user segments of core product.

The company’s market leadership in key product segments and strong demand outlook is expected to drive business growth and profitability. With a positive outlook for mining, infrastructure and power sector, the company expects to benefit from increased Technical Ammonium Nitrate (TAN) demand, a trend that is likely to sustain.

"The demand and prices for nitric acid are expected to remain strong owing to diminishing availability of down streams of from China and resultant higher pricing. The shift of global supply chain trend towards India will continue to drive strong demand of Nitric Acid from downstream customers. The IPA small pack demand both from Pharma and LR grade are expected to remain strong," the company said in their FY22 annual report.

With an increase in coal, steel and cement production, the demand for explosives in the mining and infrastructure segments of the Indian economy is expected to grow, said the management. Besides, strategically directed efforts from crop specific products to farmer-focused marketing drives are also expected to benefit the company.

As higher reservoir levels and appropriate monsoon coverage in the company’s core command region is witnessed, the company anticipates consumption to pick pace in second quarter of this fiscal, driven by higher commodity prices for cash crops.

"In Q2, TAN business focus is to ensure continuous evacuation and operation of TAN plants in view of seasonally lean demand as well as momentum in ammonium nitrate imports. To support continuous production, the company’s country wide warehouse network will be used to distribute build-up stock in H2," the management added.