IIFL Securities initiates coverage on Deepak Fertilisers

IIFL Securities has initiated coverage on Deepak Fertilisers and Petrochemicals Corporation Ltd. (DFPCL) with a BUY rating and Target Price of Rs. 900 (44%).

Key Highlights

- We raise FY23/24ii EPS by 11%/5% as we assumed better near term margins for the TAN business. Our SOTP-based Jun-23 TP (rolled forward from Mar-23) moves up to Rs. 900 (from Rs. 835)

- 4Q Ebitda/PAT topped IIFLe by 56%/75%, driven by strength in the TAN and nitric acid businesses. Tightness in both these markets has enabled the company to pass on rising input costs

- Mgmt expect margins to remain firm in the near-term as demand for both key products remains robust. Increase in share of specialty products should also drive structural margin improvement

- The benefit from manufacturing ammonia (vs importing) is currently ~US$550-600/MT and should this sustain, returns from the ammonia plant will likely be double of that estimated

- At just 11x FY23ii P/E, we continue to find the stock undervalued. Commissioning of the ammonia and TAN projects will drive medium term growth

Shares of Deepak Fertilizers and Petrochemicals Corporation Limited was last trading in BSE at Rs. 665.10 as compared to the previous close of Rs. 690.25. The total number of shares traded during the day was 34283 in over 2513 trades.

The stock hit an intraday high of Rs. 704.45 and intraday low of 661.60. The net turnover during the day was Rs. 23409528.00.

Source : Equity Bulls

Keywords

DeepakFertilizersandPetrochemicalsCorporation INE501A01019 IIFLSecurities InitiatingCoverage