Sell Deepak Nitrite; target of Rs 1530: Motilal Oswal

Motilal Oswal's research report on Deepak Nitrite

Deepak Nitrite (DN) reported a weak operating performance, with EBITDA declining 31% YoY to INR2b in 2QFY26. Gross margin contracted 440bp YoY to 27.6% and EBITDA margin contracted 390bp, driven by macro headwinds, pricing trends, and tariff developments. Amid a volatile geopolitical environment and shifting global trade dynamics, we expect a recovery in 2H, led by the ramp-up of new capacities, improved volumes from market seeding of new products and SKUs, and the company’s strategic initiatives to pivot into non-traditional geographies and debottleneck certain capacities.

Outlook

We broadly retain our estimates for FY26/FY27/FY28 and estimate a CAGR of 6%/12%/8% in revenue/EBITDA/PAT over FY25-28E. We value the stock at 25x FY27E EPS to arrive at our TP of INR1,530. Reiterate Sell.