Deepak Nitrite shares hit 10% lower circuit as weak Q3 earnings dampen sentiment

Shares of Deepak Nitrite Ltd (DNL) crashed as much as 10 percent to hit a lower circuit of Rs 2,014 on February 14 after the company’s third-quarter results revealed a sharp decline in net profit and revenue, raising investor concerns over growth prospects.

The chemical manufacturing company reported a 51.5 percent year-on-year drop in net profit for the third quarter of FY25, with earnings falling to Rs 98 crore from Rs 202 crore a year ago. Lower sales and a sharp decline in operating margins weighed on the company’s performance.

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A key player in India’s chemical sector, Deepak Nitrite produces intermediates for industries such as agrochemicals, paints, and pharmaceuticals. With margin pressures persisting, analysts believe cost-cutting measures and capacity expansions will be crucial for future growth.

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Revenue declined 5.3 percent to Rs 1,903.4 crore from Rs 2,009.2 crore in Q3FY24, reflecting softer demand in key segments. EBITDA tumbled 44.7 percent to Rs 168.5 crore from Rs 304.6 crore, impacted by higher input costs and lower realizations. EBITDA is earnings before interest, tax, depreciation and amortization.

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Operating margins shrank to 8.9 percent from 15.2 percent in the year-ago quarter, highlighting cost pressures and weaker pricing power. The chemical industry has been grappling with subdued demand from end-user sectors like paints, cosmetics, and pharmaceuticals.

At about 9:20 am, shares of the company were trading at Rs 2,074, lower by 7.3 percent from the last close on the NSE. With today's fall, Deepak Nitries shares have tanked 13 percent this week.

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