Deepak Nitrite Ltd. (DNL), one of the fastest growing and trusted chemical intermediates company in India, has posted a net profit of Rs. 98 crore for the quarter ended December 31, 2024 as compared to Rs. 202 crore in the quarter ended December 31, 2023, reflecting a drop of 51.5 per cent.

DNL’s revenue in Q3 fell 5.3 per cent on YoY basis to Rs 1,903.4 crore as against Rs 2,009.2 crore clocked in Q3 FY2024.

EBITDA fell by 44 per cent YoY to Rs 168.5 crore as against Rs 304.6 crore in Q3FY24. EBITDA was affected by higher input costs and lower realizations.

The operating performance of the company in the quarter was aberrant arising from a perfect storm of plants being idled because of deferred demand, lag adjusted recovery in agrochemical intermediates, and elevated raw material prices and oversupply from China.

“On a segmental basis, dyes and pigments intermediates have a resilient demand where the company maintains a strong market share. Margins contracted because of a transient feedstock price increase. There is an expectation of margin expansion in this quarter. Intermediates like DASDA continue to be imported at unreasonable prices and the government has initiated an investigation of dumping,” the company said in its presentation.

On the agrochemicals side, the company’s plants were idled as customers prioritised inventory destocking. “We are already experiencing volume pickup from international customers beginning this quarter and we are expecting domestic customers to start lifting by the end of the quarter. We expect thereafter demand patterns to normalize. On Performance Products, the outlook remains unchanged,” the company added.

In Deepak Phenolics, margins were compressed because of firm input prices as well as a planned shutdown for maintenance which resulted in unusual import quantities. On a positive note, post startup, capacity utilization has been enhanced by an additional 10% which came into the market at the same time as import parcels. “We expect that the rationale for importing would be mitigated as the market digests increased domestic supply availability. The new asset to produce acetophenone will be commissioned in H1,” the company added.

Meanwhile, DNL has taken several measures to ensure that productivity and profitability are meaningfully improved. “The company has commissioned four new products during Q3 and in the quarter with orders in hand. Cost improvement initiatives and debottlenecking activities will further improve performance. Our nitric acid complex is in the advanced stages of pre-commissioning and will feature in Q1 numbers. Other large projects are expected to be commissioned during H1. We are cautiously optimistic that Q4 onwards, profitability in DNL will return to normalized levels,” the company added.

Project Status

* Nitric Acid project is under pre-commissioning and expected to be commissioned toward the end of the current quarter.

*MIBK/MIBC Project: All Engineering and procurement is completed. Expected to be commissioned by H1 FY26

*Other Projects: Nitration and hydrogenation will be commissioned together in H2 FY 25. (Fluorination block was commissioned in Q4FY24)

*Acetophenone Project: Expected to be commissioned by H1FY26

* The R&D Centre at Savli, Vadodara, having an estimated total capital expenditure of Rs. 115 crore is on track for completion by March 2025. As of January 2025, about 85% of the project is completed.