DEEPAK NITRITE - Q1 FY 18-19 - INVESTOR PRESENTATION

DEEPAK NITRITE

Q1 FY 18-19 

INVESTOR PRESENTATION

Deepak Nitrite is Headquartered at Vadodara, Gujarat. It is one  of  the leading  manufacturers  of Basic Chemicals (BC), Fine & Speciality Chemicals (FSC) & Performance Products (PP). It has announced its financial results for the quarter ended June 30, 2018.Q1 FY2019

 Revenue  :  Rs.  421.82  crore vs  Rs.  316.85  crore (excluding Fire  and  loss  of  profit  insurance  claim  of  Rs.  22.5 crore)    in  Q1  FY18, resulting  in  robust growth  of  33% yoy. 

Basic  Chemicals  witnessed  improving  demand and  pricing  for  key  products, 

Fine  &  Speciality  Chemicals saw  strong  traction  especially  in export  markets. 

Performance  products    has   delivered  an  encouraging performance on the back of strategic initiatives implemented earlier.

 EBITDA : Rs.  56.89  crore,  vs  to  Rs. 34.17crore (excluding  Rs.18.33 crore –Net  of  Expenses,  due  to  insurance  claim) –a growth of 66% reported in Q1 FY18.  

EBITDA  margins :13.5% Vs 10.8% in Q1 FY 18 , improved 270 BPS

PBT  :  Rs. 33.36 crore  in Q1 FY19, vs Rs. 12.38 crore in Q1 FY 18, a growth of 170% in Q1 FY 18. Figures of Q1 FY18 are not fully comparable as it had an impact of incident of fire at Doha.

PAT  :  Rs. 21.78 crore  in Q1 FY19 Vs  Rs. 8.10 crore  in Q1 FY18, a growth of 169%

 EPS : Rs.1.60 for Q1 FY19 (on face value of Rs. 2 each) on an enlarged capital base  compared  to  Rs. 1.54 per  share  in Q1 FY18. 

(QIP:  Issuance  of  56,81,775  shares  of  Rs.  2 each at a price of Rs. 264 per share in January, 2018). 

Mr.Deepak C. Mehta, CMD said, 

“We have been able to (i) successfully pass on rising  input  costs  to  customers  (ii)  have  managed  to  report higher volumes  across  export  and  local markets (iii)  focused  initiatives  to  turnaround   Performance  Products segment have also delivered. 

our growth during the year will be driven by (i) increase in capacities for select products, (ii) buildup of newly introduced product lines and (iii) recognizing pockets of opportunity due to the shifts in the global  supply  chain. 

 Domestic  revenues  stood  at  Rs. 265.05 crore  in Q1FY19 vs  Rs. 214.95 crore  in Q1 FY 18, growing by 23% Y-o-Y. 

Revenues from exports came in at Rs.153.82 crore in Q1FY19 Vs Rs. 98.36 crore in Q1FY18,higher  by 56%. 

Segmental Performance

Revenues  from  the BC segment stood  at Rs. 222.62 crore  in Q1FY19 Vs  Rs. 180.44 crore  in Q1FY18, growing  by23%  Y-o-Y. Volume growth was 7%

Revenues from FSC segment were Rs. 122.37 crore in Q1 FY19, higher by 49%compared to Rs.81.94 crore in Q1 FY18. solid volume growth of 25%

PP segment reported revenues of Rs. 80.51 crore in Q1 FY19 compared to Rs. 60.61 crore in Q1 FY18, a Growth of 33%y-o-y. Management strategy to turn around the PP segment has delivered results.

UPDATE ON PHENOL AND ACETONE PROJECT

DNL is implementing a mega project, to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of the co-product Acetone. This is being supported by capacity to manufacture 260,000 MT of Cumene, which is a feedstock for manufacturing Phenol and Acetone.

This project is being implemented in a 100% subsidiary, i.e. Deepak Phenolics Limited (DPL). The proposed Phenol Plant is located at Dahej, with a capital expenditure of Rs. 1,400 crore being funded by debt and equity in the ratio 60: 40.

DPL will address the opportunity in the domestic market which is currently met by imports. Its plant is being based on cutting-edge technology and will be resource and energy efficient. Local availability of Phenol and Acetone is expected to boost the production of derivatives and downstream intermediates, which will expand the overall market in the country.

Progress:

All pre-commissioning activities have been concluded and the mega-greenfield project is on the verge of commissioning. the plant is expected to be commissioned in the month of August, 2018.

OUTLOOK

The roadmap for FY19 appears encouraging as we expect to deliver sustained growth across all the Strategic business Units-Basic Chemicals, Fine & Speciality Chemicals and Performance Products.

Growth will be led by Basic Chemicals due to focus on further strengthening of product portfolio as well as brown field capex to enhance capacities of major products. The FSC segment will benefit from full capacity utilisation during the year after receiving the regulatory consent for the backward integration facility at Roha. 

As informed earlier, in order to take advantage of growing demand, the company has further invested Rs 60-70 crores for increasing capacity in existing products in BC, FSC segments. These projects shall be commissioned by Q2 FY2019. 

With the additional capacity, we shall see much improved performance in second half of FY2019 and thereafter. PP segment will benefit from the improved demand and pricing trends in the local and export markets combined with better efficiency and utilisation of the plant. 

Lastly, the commissioning of the Phenol and Acetone facility will be a significant event for the Company which will drive a quantum leap in its revenues and profitability as well as enhance the growth trajectory for the Company as it will pave the way to enter in various derivatives business.

REVENUES

Particulars           Q1 FY19        Q1 FY18        %

Revenue from Operations 421.02 314.78       33.8%

PBT                                   33.36            30.71     8.6%

PAT                                   21.78            20.10     8.4%

EPS(Rs.)                            1.60              1.51       6.0%

Note: 1. Insurance      claim      for damages  and loss of profit, included in the numbers for Q1FY18

Debt/Equity Ratio                     0.45       0.79