Deepak Nitrite shares rallied 12 per cent intra-day on Monday and scaled a new high of Rs 1,240 on the BSE after the chemical intermediates company delivered a strong operational performance with consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) growing 25 per cent year on year (YoY) at Rs 340 crore in the December quarter.
The consolidated Ebitda margin expanded by 330 basis points (bps) to 27.4 per cent. The margin accretion has been driven by the increased volumes and higher efficiency in plant operations of the phenolics business supported by better sourcing, logistics and marketing for the wider product basket including Isopropyl Alcohol (IPA), which commenced in Q1 of the current fiscal.
Revenues grew 9 per cent to Rs 1,240 crore in Q3FY21, led by robust YoY improvement in the phenolics business aided by incremental contribution from IPA products. The profit after tax (PAT) was higher by 38 per cent YoY at Rs 217 crore. The operational improvement in the phenolics business and contribution from IPA supported by better logistics and sourcing have been accompanied by lower finance costs and depreciation, which has led to the sharp rise in quarterly PAT.
In the backdrop of volatile input prices and persistent sluggishness in some end-use industries like oil, paper, textile we have achieved a strong sequential recovery in both revenues and profitability, the management said, and expect the trend to continue in January-March quarter (Q4FY21).
The management further said the company is also setting the platform for continued growth through planned introductions of newer products and projects. The Company is witnessing encouraging demand scenario across several end user industries, and that is expected to continue as it moves ahead. Second phase of the IPA plant is progressing well and remains on track to be commissioned in the fourth quarter. Brownfield expansions at Nadesari plant along with other downstream products in the phenolics business also contribute to the strong outlook, it said.
At 10:02 am, the stock was trading higher by 9 per cent to Rs 1,208 on the BSE, as compared to 0.93 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more-than-doubled with a combined 2.1 million equity shares changing hands on the NSE and BSE, till the time of writing this report.