Deepak Nitrite starts production of 2 Ethyl Hexyl Nitrate; stock up 7%

The stock was up 7 per cent to Rs 465 on Wednesday, thus surging 22 per cent in the past two trading days.

Shares of Deepak Nitrite climbed 7 per cent to Rs 465 on Wednesday, thus surging 22 per cent in the past two trading days after the company commenced the production of 2 Ethyl Hexyl Nitrate (2EHN) at its Nandesari facility in Gujarat with effective Monday, April 6, 2020.

2EHN finds application and is one of the essential raw materials / additives used in refining process of diesel oil produced by various refineries.

In view of requirement of 2EHN by petroleum refineries to ensure continued supply of diesel oil during lockdown due to COVID-19, the Company applied to the concerned authorities for granting permission to manufacture 2EHN.

“Accordingly, Vadodara District Industries Commissionerate vide their letter dated March 31, 2020 granted permission to the Company to commence production of 2EHN at its manufacturing facility situated at 4-12, GIDC Chemical Complex, Nandesari, Dist. Vadodara, Gujarat (Nandesari facility),” Deepak Nitrite said in a regulatory filing.

“In view of the above and in order to support uninterrupted supply of essential commodities across the Nation, the Company, after taking all precautionary measures for ensuring supply of raw materials and manpower; and safety of its workmen, commenced production of 2EHN at its Nandesari facility effective April 6, 2020,” it added.

For the nine months ended December 2019, Deepak Nitrite had reported an over four-fold jump in standalone profit before tax (PBT) at Rs 546 crore, on the back of strong operational performance. It had PBT of Rs 125 crore during the same period last year. The company’s total revenue from operations rose 30 per cent at Rs 1,306 crore on year-on-year basis.

The stock of commodity chemicals company hit an all-time high of Rs 543 on March 4, 2020. Despite a 14 per cent correction from record high level, it has outperformed the market by surging 21 per cent in the past three months, as compared to a 25 per cent fall in the S&P BSE Sensex during the same period.

During the recent fall in stock price, the promoters had bought 64,500 equity shares or 0.03 per cent stake in the company via open market, the exchange data shows.

At 11:41 am, Deepak Nitrite was trading 5 per cent higher at Rs 456 on the BSE, against 1.6 per cent rise in the S&P BSE Sensex. A combined 596,000 shares changed hands on the counter on the NSE and BSE so far.