Chemical stock jumps after signing 15 yr supply agreements with Petronet LNG

During Friday’s trading session, the shares of a leading manufacturer of chemical intermediates in India are in focus, after the company announced entering into an agreement with Petronet LNG for the supply of Propylene & Hydrogen for 15 years.

Stock Performance

With a market cap of Rs. 32,161.5 crores, the shares of Deepak Nitrite Limited opened in the green at Rs. 2398.8, up by nearly 1 percent, as against its previous closing price of Rs. 2,379.05.

The stock delivered positive returns of nearly 6 percent in one year, while around 24 percent of negative returns in the last one month.

What’s the news

Deepak Nitrite Limited has announced that its wholly-owned subsidiary, Deepak Phenolics Limited (DPL), has received approval from its Board to execute definitive agreements with Petronet LNG Limited (PLL) for the supply of Propytene and Hydrogen.

According to recent regulatory filings with the stock exchanges, DPL and PLL have finalized agreements for the supply of 250 KTPA of Propytene and 11 KTPA of Hydrogen by PLL to DPL.

The supply period under these agreements is set for 15 years, starting from the first delivery of propylene and hydrogen by PLL to DPL.

Propytene and Hydrogen are key raw materials used in various industrial processes, and their inclusion in DPL will serve critical purposes related to the company’s operations for producing phenolic resins, optimizing chemical production processes, and generating key feedstocks for various industrial applications. 

These materials will help strengthen DPL’s chemical manufacturing capacity and enhance its market offerings.

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Financials

The company reported a significant growth in consolidated revenue from operations, experiencing a year-on-year increase of nearly 14.3 percent, rising from Rs. 1,778 crores in Q2 FY24 to Rs. 2,032 crores in Q2 FY25.

In contrast, during the same period, the company’s net profit decreased from Rs. 205 crores to Rs. 194 crores, representing a marginal decline of around 5.4 percent YoY.

EBITDA for Q2 FY25 remained the same at Rs. 319 crores, while the EBITDA margins declined from 18 percent in Q2 FY24 to 16 percent in Q2 FY25.

Despite subdued demand in agrochemicals, the company’s strong domestic market presence, along with positive momentum in the phenolics business, has helped mitigate global challenges.

The company achieved its highest-ever quarterly production and sales for certain agrochemical intermediates, as well as for some products in the Dyes and intermediates segment.

In H1 FY25, it recorded record sales of agrochemical intermediates to China and set new production benchmarks for Isopropyl Alcohol (IPA).

While margins in Advanced Intermediates were lower, continued strong earnings in the Phenolics segment helped maintain overall profitability. Stable pricing in Phenolics, along with improved plant throughput, contributed to EBITDA growth in the segment.

About the company

Incorporated in 1970, Deepak Nitrite Limited, a prominent chemical manufacturing public limited company, is engaged in the business of manufacturing Basic Intermediates, Fine & Speciality Chemicals, Performance Products, and Phenolics.

The company has been the largest producer of Phenol and Acetone since 2018 in India and is among the top 3 global players for products like Xylidines, Cumidines and Oximes.

Written by Shivani Singh

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