Deepak Nitrite Delivers yet Another Quarter of Elevated Performance During Q3 FY2020

Ranked among Fortune Next 500 and recognized among the top 25 wealth creators by Fortune Magazine, India, Deepak Nitrite (NSE - DEEPAKNTR) (BSE - 506401) is acknowledged as a major manufacturer of chemical intermediates. It has a diversified portfolio of intermediates that cater to the dyes and pigments, agrochemical, pharmaceutical, plastics, textiles, paper and home and personal care segments in India and overseas. Its products are manufactured across five locations, which are all accredited by Responsible Care. Deepak Nitrite Limited has announced its financial results for the quarter and nine months ended 31st December, 2019.

Deepak Nitrite Ltd. (DNL) is reaping benefits out of being an integrated player in the chemicals industry. It sources most of its raw materials domestically and supplies a diverse range of intermediates across industries including agrochemicals, pharma, colors, refinery products, personal care and healthcare products. It has assiduously maintained its position as a supplier of choice for global and domestic customers alike.

Deepak Phenolics Ltd. (DPL) registered revenue growth of 24% to Rs. 550 crore in Q3 FY20, with EBITDA of Rs. 58 crore and has delivered its maiden profitable quarter with PAT of Rs. 15 crore. Despite the challenges in the Phenol and Acetone market globally and slowing economic growth in the domestic market, the Company has been able to increase sales volumes to sustain its leadership position in the domestic market. The capacity utilization continued to remain high, at over 100%.

CMD's Message

Commenting on the performance, Mr. Deepak C. Mehta, Chairman & Managing Director, said, "I am delighted to report another quarter of strong earnings performance. Our profitability increased manifold with PBT and PAT increasing by 298% and 349% respectively. We have capitalized on growth opportunities across global markets by demonstrating agility and nimbleness throughout our operations. We have exercised tight controls over production and inventories, constantly monitored global industry developments, taken appropriate actions while closely engaging with customers, all of which has helped us to optimize our performance.

It is heartening to share that all three SBUs have demonstrated encouraging growth momentum allowing us to report higher volumes. In our standalone operations, the percentage growth in exports on a YTD basis was 3 times as fast as growth in domestic revenues, clearly demonstrating our ability to win global market share. This also underlines our leadership position in key products predicated on a high degree of backward integration.

Deepak Phenolics, which was established last year, performed extremely well in terms of volumes. However, as a commodity product, it is susceptible to the global cycle of slowing economic growth and impact of input prices which have suppressed the margins. It is hoped that the commodity cycle will improve in the latter half of the next fiscal.

All in all, I am highly excited with the opportunities emerging across the landscape and we are focussed on execution by leveraging our expertise and competencies. Given the robust business visibility, we are planning expansions across all business segments to further foster our performance."

Financial Highlights (Standalone)

Q3 FY2020

• Revenues stood at Rs. 587 crore in Q3 FY20 as compared to Rs. 458 crore in Q3 FY19, higher by 28% Y-o-Y. Balanced growth across Basic Chemicals, Fine & Speciality Chemicals and the Performance Products segment resulted in robust topline performance during the quarter. Overall, this was supported by encouraging demand scenario of Company's products in the export markets

• EBITDA grew by 200% in Q3 FY20 to Rs. 215 crore, as against Rs. 72 crore in the same period last year. Robust EBITDA performance was a result of operating leverage from higher volumes, realization gains across most products and management efforts to optimize production schedules as well as focus on high-value high-margin products. • PBT was at Rs. 191 crore in Q3 FY20, rising by 298% over Rs. 48 crore in the same period last year

• PAT stood at Rs. 142 crore in Q3 FY20, as against Rs. 32 crore in Q3 FY19, registering growth of 349% on a y-o-y basis. • EPS for Q3 FY20 was Rs. 10.40 per share (of face value of Rs. 2 each) as compared to Rs. 2.32 per share in Q3 FY19

Performance Highlights

Domestic & Exports

• Domestic revenues for the quarter were Rs. 331 crore compared to Rs. 293 crore in the same period last year, growing by 13% Y-o-Y. Production efficiencies and recalibration of product mix resulted in volume growth. This was supported by higher realizations for select products.

• Revenues from exports were at Rs. 251 crore in Q3 FY20 compared to Rs. 154 crore in Q3 FY19, resulting in robust growth of 63% Y-o-Y. DNL leveraged its deep expertise and high backward integrations in certain products to capitalize on tailwinds in the global supply chain for chemical intermediates.