Deepak Nitrite Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Deepak Nitrite Limited (DEEPAKNTR) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:18:03] Nirav Jimudia from Anvil Research asked that based on the greenfield and brownfield expansions announced, what number of years would it take for sales doubling. Maulik Mehta CEO replied that same trajectory of revenue growth may not be there due to lot of new investments not coming to standalone business but into a new subsidiary, Deepak Chemtex.

• [00:23:45] Nirav Jimudia from Anvil Research enquired about DEEPAKNTR’s business and normalized EBITDA over the next 3-4 years based on current situation. Maulik Mehta CEO answered that over the next 3-4 years, DEEPAKNTR should target to double its pipeline and also, a faster growth in bottom line due to lot of backward integration taking place.

• [00:26:04] Nirav Jimudia from Anvil Research asked how the R&D team would look like once the new R&D center would be up and running. Maulik Mehta CEO answered that currently DEEPAKNTR has around 103 staff strength in total. Out of this PhDs will be 20-25.

• [00:27:12] Isha of VT Capital asked that for 2Q23, what was the volume growth and growth due to price hike taken. Maulik Mehta CEO answered that in DEEPAKNTR there was no real volume growth, because of the fire incident. In Deepak Phenolics, it will be close to about 10%. However in 3Q23 , DEEPAKNTR would see a 10% growth.

• [00:28:23] Isha of VT Capital enquired if all the price hikes been realized or some headroom is left. Maulik Mehta CEO said that if the situation moderate in terms of the RM prices then DEEPAKNTR passes that benefit to its customers with a lag. And when the prices increase, the customers support DEEPAKNTR with the price increase.

• [00:29:24] Isha of VT Capital asked what led the company to use more of natural gas apart from the crude related derivative. Maulik Mehta CEO said that it is not something that’s normal. But in order to maintain delivery commitment and to start operation in a safe manner the natural gas boiler was used.

• [00:36:50] Sudarshan with Prosperity Wealth enquired that looking at the benzene and phenol demand, if there will be margin pressure on phenol segment. Maulik Mehta CEO said that the company expects to have improved margins vs. 2Q23 due to macroeconomic trends moderating.

• [00:47:07] Abhijit Akella at Kotak Securities asked that in the advanced intermediates segment, if DEEPAKNTR is back to normal margin starting the March quarter. Maulik Mehta CEO replied DEEPAKNTR will expect an improvement vs. 2Q23 as there were lot of tailwinds.

• [00:51:22] Abhijit Akella at Kotak Securities enquired about the India and global volume growth rate. Maulik Mehta CEO said that over the last 3-5 there has been remarkable consistency in growth in consumption of phenol in India. So one should not look at from a 2-3 quarter perspective of it being low.

• [00:57:38] Meet of Anubhuti Advisors asked about the blended utilization levels for Nandesari plant in 2Q23. Maulik Mehta CEO said that close to 50% of the volume was operated at 50% run rate for the duration of the quarter. And the remaining 50% was operated at about 80-90% run rate.