Deepak Fertilisers jumps after decent Q2 results

Deepak Fertilisers and Petrochemicals Corporation jumped 4.73% to Rs 110.80 at 10:15 IST on BSE after net profit rose 11.8% to Rs 45.44 crore on 42.9% increase in net sales to Rs 983.79 crore in Q2 September 2013 over Q2 September 2012.

The company announced result after market hours on Thursday, 24 October 2013.

Meanwhile, the BSE Sensex was down 48.52 points, or 0.23%, to 20,676.91.

On BSE, 9,846 shares were traded in the counter compared with average volume of 15,539 shares in the past one quarter.

The stock hit a high of Rs 111.95 and a low of Rs 107.10 so far during the day. The stock hit a 52-week high of Rs 137.95 on 25 October 2012. The stock hit a 52-week low of Rs 81.20 on 1 August 2013.

The stock had underperformed the market over the past one month till 24 October 2013, sliding 0.61% compared with the Sensex's 4.04% rise. The scrip had, however, outperformed the market in past one quarter, rising 7.63% as against Sensex's 3.16% rise.

The small-cap company has an equity capital of Rs 88.20 crore. Face value per share is Rs 10.

Deepak Fertilisers & Petrochemicals Corporation recorded a 43% growth in total income to Rs 990.10 crore in Q2 September 2013 from Rs 690.69 crore in Q2 September 2012.

Total income grew by 33% in Q2 September 2013 over Q1 June 2013 mainly driven by strong growth in chemical and fertiliser business segments. Profit before tax grew by 7% and profit after tax grew by 6% in Q2 September 2013 over Q1 June 2013.

The profitability for the quarter was after accounting for forex loss of Rs 8.12 crore (included in borrowing costs). The borrowing costs were also higher on account of larger working capital related borrowings, in view of delayed subsidies.

The chemicals segment registered a growth of 55% to Rs 575.81 crore in Q2 September 2013 from Rs 370.75 crore in Q2 September 2012. Higher volumes in key products like lso Propyl Alcohol and Technical Ammonium Nitrate, which grew by 25% and 40% respectively, contributed to the all round growth in segment revenue as well as profits.

Profits for the chemicals segment stood at Rs 60.50 crore in Q2 September 2013 as against Rs 46.42 crore in Q2 September 2012 registering a growth of 30%. Easing of raw materials prices like Ammonia also contributed towards profitability of the segment, even though rupee depreciation partially neutralized the drop in Ammonia prices.

Growth in the agri-business was largely driven by a rise in manufacturing volumes, favourable monsoons and higher availability of phosphoric acid, and also due to a significant improvement in volumes in the specialty fertiliser business. Segment revenues for Q2 September 2013 for the Agri-business grew by 33% to Rs 450.53 crore Q2 September 2013 over Q2 September 2012. Segment profitability for the Agri-business grew to Rs 48.40 crore in Q2 September 2013 as against Rs 39.97 crore in Q2 September 2012. The segment revenue grew by 99% in Q2 September 2013 over Q1 June 2013. However, profitability continued to remain at 11% in line with the previous quarter.

Speaking about the company's performance, Mr. Sailesh C. Mehta, Chairman & Managing Director - DFPCL, said: In spite of the continuing adverse economic conditions, the Company has achieved substantial capacity utilization for all its key products i.e. lso Propyl Alcohol, Technical Grade Ammonium Nitrate and Ammonium Nitro Phosphate which is reflected in the 43% growth in the revenue on Y on Y basis. Though raw materials prices softened during the current period, rupee depreciation adversely impacted raw material costs and hence profitability of the Company to an extent. Going forward, the expected stability of Indian currency and improvement in the economic environment should help the Company in improving profitability in the coming quarters."

He further mentioned that "widening demand supply gap in the key products, leading to higher imports, also signaled the urgent need for the Company to enhance capacities as well as expand the product portfolio. While the Company has already embarked on expanding its fertiliser manufacturing capacity, it is also evaluating various options in the chemicals space."

Deepak Fertilisers and Petrochemicals Corporation is a multi-product Indian conglomerate with a multi-product portfolio spanning industrial chemicals, bulk and specialty fertilisers, farming diagnostics and solutions, technical ammonium nitrate, mining services and consulting and value added real estate.

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