Capitaline

Analyst Meet / AGM 08-May-21

Conference Call

Deepak Nitrite

Expects capex of Rs 400 crore in FY22

Deepak Nitrite held a conference call on 07 May 2021 to discuss the results for the quarter and year ended Mar'21 and way forward. Mr. Maulik Mehta, Executive Director and Chief Executive Officer, Mr. Sanjay Upadhyay – Director, Finance & CFO and Mr. Somsekhar Nanda – Deputy CFO of the company addressed the call.
Highlights of the Concall

Revenues grew by 39% to Rs. 1,469 crore in Q4 FY21 bolstered by volume as well as realization gains in the Phenolics business which witnessed an incrementally favorable demand environment at the end user industries. Revenue growth was further supported by basic chemical and fine & speciality chemical segments, which witnessed volume growth and firm prices.

The company has either maintained or increased market share across products during the year.

The company leveraged the optimal utilisation at its plants by participating in both, the domestic and export market, thereby driving earnings. The company continues to operate at elevated productivity levels at all facilities while complying with government regulations and safety procedures.

The basic chemicals segment has performed well driven by higher contribution from key products. The segment reported revenues of Rs. 245 crore in Q4 FY21 compared to Rs. 226 crore in Q4FY20, higher by 9%. This came in despite significant increase in raw material prices and was driven by robust volume growth YoY due to sharp rebound in key end user industries. The BC segment was able to pass on costs to thereby driving realizations higher for select products.

The Fine & speciality segment has also been a growth engine for the quarter as favourable absorption by end user industries has driven volumes and realizations higher. The FSC segment revenues grew by 30% to Rs. 206 crore in Q4 FY21 compared to Rs. 158 crore in Q4 FY20 supported by volume increment of 15%. Encouraging demand resulted in better pricing in the FSC segment on a YoY basis although it has had to absorb near term cost increase until it can review prices on a quarterly basis with customers .

In performance product segment, DASDA prices are now exceptionally lower after prevailing at abnormally high levels in the same quarter last year. This impact was more than offset by the Phenolics business which has capitalized on the improved demand landscape by elevating plant efficiency to generate higher volumes thereby benefiting from prevailing firm realizations.

The performance product segment revenues came in lower at Rs. 87 crore in Q4 FY21. Overall volumes in the segment improved 12% in-line with the opening of the economy. Given the pick-up in economic activity and demand recovery across key end user industries, performance product segment volumes have already reverted to pre-COVID levels and pricing is expected to follow.

Deepak Phenolics revenues grew by 77% to Rs. 938 crore in Q4FY21 compared to Rs. 531 crore in Q4FY20. Revenue realization for both Phenol and Acetone has increased significantly from last year as a result of healthy demand. Deepak Phenolics capacity utilisation was 130% in Q4FY21 backed by a turnaround in domestic user industries and export demand. While EBIT soared by 319% YoY, the EBIT margin stood at 28.5% in Q4FY21 as compared to 12% in Q4FY20. Improved prices and increased capacity utilization helped performance significantly.

The EBITDA margin is higher by 600 bps to 31% in Q4FY21 led by favorable pricing environment, higher plant efficiency and operating leverage. This would have been even higher, but for the impact of abnormally high DASDA prices in the base period.

The company is investing around Rs 300 crore into products that utilize its core platforms for new agrochemical and pharmaceutical intermediates. Introduction of new platforms including fluorination and photo chlorination are also being undertaken. The new investment is expected to be completed by the second half of next year.

During the quarter, DPL has pre-paid its project term loan to the extent of Rs.100 crore without incurring any prepayment penalty out of the total repayment of Rs 265 crore in FY21. This will result in substantial reduction in interest cost in the following periods.

Land development in Dahej-2 is nearing completion on a 55-acre site out of a total of 127 acres. The site will support capacity enhancement for key products in a standalone business and will be developed in stages.

The company expects capex of Rs 400 crore in FY22- Rs 300 crore is earmarked towards growth capex and Rs 100 crore is towards brownfield expansion. The company indicated that it will advance its core competencies of nitration, reduction and diazotization into new intermediates for agrochemicals and pharmaceuticals.

Previous News

Deepak Nitrite
( Results - Analysis 03-Aug-22 08:34 )

Deepak Nitrite
( Analyst Meet / AGM - Conference Call 16-Feb-24 08:11 )

Deepak Nitrite
( Results - Analysis 15-Feb-24 00:24 )

Deepak Nitrite to hold AGM
( Corporate News - 13-Jul-23 17:13 )

Deepak Nitrite
( Analyst Meet / AGM - Conference Call 27-Jan-22 23:04 )

Deepak Nitrite to convene board meeting
( Corporate News - 15-Dec-21 09:46 )

Deepak Nitrite standalone net profit declines 40.71% in the June 2020 quarter
( Results - Announcements 06-Aug-20 17:25 )

Deepak Nitrite board to mull fund raising on 22 Dec
( Hot Pursuit - 15-Dec-21 09:18 )

Deepak Nitrite invests $ 2 mn in Deepak Oman Industries FZC LLC
( Corporate News - 12-Aug-23 10:45 )

Deepak Nitrite Limited: Rating reaffirmed at [ICRA]AA-/A1+; Outlook revised to Positive
( Press Releases - 17-Jun-20 11:58 )

Deepak Nitrite
( Results - Analysis 22-Jan-18 12:23 )