Shares of Deepak Fertilisers and Petrochemicals Corporation have been under pressure since October. However, the recent correction could be an opportunity to buy this chemical stock due to the company’s healthy growth outlook.
Brokerage firm Emkay Global Financial Services has initiated coverage on the stock with a buy recommendation, pegging the target price at ₹2,000, implying a nearly 42 per cent upside from the stock’s November 18 close of ₹1,412.35 on the BSE.
Deepak Fertilisers’ share price has dropped over 5 per cent in November so far (till the 18th) after an almost 1 per cent decline in October. On Wednesday, November 19, the stock rose over 3 per cent in intraday trade.
Deepak Fertilisers’ share price hit a 52-week high of ₹1,776.95 on July 3 after hitting a 52-week low of ₹888.25 on March 3 this year.
Deepak Fertilisers: Why does Emkay suggest a buy?
Brokerage firm Emkay pointed out that Deepak Fertilisers’ product portfolio is well-aligned with India’s growth story.
The company, according to Emkay, plans to transition from commodity to speciality offerings across its existing product portfolios.
“Technical ammonium nitrate (TAN) expansion in Gopalpur, nitric acid (NA) expansion in Dahej, and the Equinor contract’s pricing benefit in ammonia manufacturing will drive at least 50 per cent EBITDA growth over FY26-28E,” said Emkay.
Emkay pointed out that Deepak Fertilisers is the market leader in bentonite sulphur and water-soluble fertilisers in India, with a strong presence in Maharashtra, Gujarat, and Karnataka. It is steadily expanding across other southern and northern states. The tie-up with the Haifa Group will aid technological advancements to promote high-performance speciality fertilisers and improve crop yield, Emkay said.
Moreover, Deepak Fertilisers has restructured its businesses into different entities, which it plans to demerge in the next two to three years. This, Emkay believes, will lead to value unlocking and multiple re-rating across businesses.
“In our view, the value of the mining business with an expanded TAN capacity of nearly 1mmt (Dec-27E EBITDA of nearly ₹17 billion at 12 times EV/EBITDA is ₹19 billion) is higher than the overall current market cap of Deepak Fertilisers,” Emkay said.
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