Deepak Nitrite Surges 6% on New Gujarat Plant Commissioning

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AuthorIshaan Verma|Published at:
Deepak Nitrite Surges 6% on New Gujarat Plant Commissioning
Overview

Deepak Nitrite shares climbed nearly 6% as its subsidiary, Deepak Chem Tech, commissioned a new Nitration and Hydrogenation Plant in Dahej, Gujarat. The commissioning marks a significant expansion for the company. This development comes despite recent financial headwinds, including a 6% year-on-year revenue dip in Q2FY26, with management citing challenging operating conditions and global trade pressures. The company is strategically focusing on capacity ramp-up for improved second-half performance.

New Capacity Boosts Deepak Nitrite Stock

Deepak Nitrite shares experienced a significant uptick, surging 5.8 per cent to an intra-day high of ₹1,625.4 on Friday. The rally was directly linked to the commissioning of a new Nitration and second Hydrogenation Plant by its subsidiary, Deepak Chem Tech Limited, located at Dahej in Gujarat. This strategic expansion signifies a crucial step for the company's manufacturing capabilities.

Navigating Financial Headwinds

The upbeat market response occurred despite the company's recent financial disclosures. For the September quarter (Q2FY26), Deepak Nitrite reported a profit after tax of ₹119 crore, a 39 per cent decrease from the previous year. Revenue from operations also declined by 6 per cent year-on-year to ₹1,902 crore. Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell to ₹224 crore, with margins narrowing to 12 per cent from 16 per cent.

Business Segment Performance and Strategy

Management attributed the year-on-year decline to substantially different operating conditions. While the Phenolics business saw volume growth and improved contributions from lower feedstock prices, the Advanced Intermediates segment faced pressure. This was due to the direct and indirect impacts of US tariff actions and the persistent influx of underpriced Chinese products. In response, Deepak Nitrite has focused on pivoting to non-traditional geographies, increasing emphasis on domestic markets, investing upstream, and optimising existing capacities. Profitability pressures are being managed through enhanced product circularity, energy source diversification, and rigorous cost optimisation.

Outlook for Second Half

Although the near-term outlook remains challenging, the company anticipates an improvement in its performance during the second half of the fiscal year. This is expected with the ramp-up of new capacities, market seeding for new products, and potential easing of US trade tariffs, which could provide a further boost.

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