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    Deepak Nitrite Limited

    DEEPAKNTR
    Chemicals·18 May 2026
    Management Summary

    Deepak Nitrite reported strong Q4 FY26 results despite a challenging global chemical environment, driven by robust domestic demand, improved margins, and operational efficiencies. While facing technical issues with its nitric acid plant and increased receivable days, the company is progressing well on key expansion projects and anticipates a stronger margin profile in FY27.

    Highlights

    5

    • Consolidated revenues for Q4 FY26 stood at INR 2,127 crore, with PAT growing 120% quarter-on-quarter and 9% year-on-year to INR 220 crore.

    • EBITDA margin significantly improved to 18% during Q4 FY26 compared to 11% in Q3 FY26, reflecting strong sequential growth of 74% over Q3.

    • Advanced Intermediates witnessed healthy growth, with revenues of INR 708 crore (up 8% YoY and QoQ) and EBIT improving to INR 34 crore from INR 15 crore in Q3 FY26.

    • Phenolics segment delivered strong performance, with EBIT margins improving to 20% and EBIT at INR 287 crore in Q4 FY26.

    • Key growth projects like multipurpose agrochemical intermediates, MIBK, MIBC are scheduled for commissioning in Q2 FY27, and the polycarbonate facility execution is on track for June 2028.

    Concerns

    3

    • The nitric acid plant operated at approximately 45% utilization in Q4 FY26 due to technical issues, impacting its target EBITDA contribution.

    • The global chemical industry continued to operate in a challenging environment during FY26, with Q4 intensified by geopolitical disruptions, logistics challenges, and crude oil volatility.

    • Receivable days increased due to lower realization and a strategic shift to dealership/CSA models in a volatile market to secure outstanding payments.

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹2,127 Cr-3.4%YoY
    2. 02Consolidated EBITDA₹383 Cr+13%YoY
    3. 03Consolidated EBITDA Margin18%
    4. 04Consolidated PBT₹301 Cr
    5. 05Consolidated PAT₹220 Cr+9%YoY

    Segment breakdown

    • Advanced Intermediates (Q4 FY26)₹708 Cr33.1%
    • Phenolics (Q4 FY26)₹1,429 Cr66.9%
    Donut· Share of Revenue

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹11,000 crores

    60:40 debt:equity for the total INR 11,000 crore projects

    Dividend

    ₹7.5/share (final)

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Nitric Acid Plant EBITDA Addition
    INR 90-100 crore
    		Medium
    Profitability
    Q1 FY27 Performance
    better than Q4
    		Medium
    Profitability
    Standalone Margin Profile
    stronger margin profile
    		Medium
    Capacity
    MIBK/MIBC Projects Commissioning
    tail end of Q1 or early part of Q2
    		High
    Capacity
    Polycarbonate Facility Commissioning
    June 2028
    		High
    New Products
    Commercial Production of Fluorinated Molecule & New Products
    regularized basis
    		High
    Overall Outlook
    Return to Normalcy
    improving trend
    		Low

    What to watch in Q1 FY27

    5

    Nitric Acid Plant Stabilization

    next quarter (Q1 FY27)
    Current~45% utilization due to technical issues in Q4 FY26
    TargetStable operations, achieving INR 90-100 crore EBITDA addition

    Why it matters

    Stabilization of this plant is crucial for realizing its full EBITDA potential and reducing reliance on external procurement.

    But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.

    Risks & concerns

    4
    RiskSeverity

    Geopolitical Disruptions and Supply Chain Volatility

    Middle East war, Strait of Hormuz blocking, and related logistics/freight challenges led to volatility in crude oil and feedstock prices in Q4 FY26. — Management acknowledged

    high

    Raw Material Price Volatility

    Volatility in prices of crude oil and related feedstocks (e.g., ortho-xylene, toluene, sulfur) continues to influence industry conditions. — Management acknowledged

    medium

    Technical Issues with Nitric Acid Plant

    The nitric acid plant operated at ~45% utilization in Q4 FY26 due to technical issues, impacting its expected EBITDA contribution. — Management acknowledged

    medium

    China Supply Dynamics and US Tariff Policies

    Near-term industry conditions are expected to remain influenced by China supply dynamics and U.S. tariff policies. — Management acknowledged

    medium

    Q&A highlights

    7

    “But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.”

    Reveals specific operational challenges and underutilization of a new plant, impacting its expected financial contribution.

    asked by Sanjesh Jain

    2 min read6 chapters

    Detailed Narrative

    01

    Q4 FY26 Performance Amidst Global Challenges

    Deepak Nitrite delivered strong operational and financial results in Q4 FY26, with consolidated revenues reaching INR 2,127 crore and PAT growing 120% QoQ to INR 220 crore. This performance was achieved despite a challenging global chemical industry environment, intensified by geopolitical disruption🌐s in the Middle East, which caused volatility in crude oil prices and logistics. The company's agility and strong operational capabilities allowed it to capitalize on emerging opportunities.

    02

    Significant Margin Expansion

    The company witnessed a substantial improvement in profitability, with consolidated EBITDA margins expanding to 18% in Q4 FY26, up from 11% in Q3 FY26. This was supported by stable volumes, favorable pricing, enhanced plant fungibility, and continuous plant process refinement. The Phenolics segment, in particular, achieved EBIT margins of 20% in Q4 FY26, driven by improving spreads and disciplined procurement.

    03

    Progress on Strategic Growth Projects

    Deepak Nitrite is making steady progress on its long-term growth initiatives. The nitration and hydrogenation facilities at Dahej, commissioned in FY26, are now stabilized and ramped up. Multipurpose agrochemical intermediates, MIBK, and MIBC projects are on track for commissioning in Q2 FY27. The execution of India's first fully integrated polycarbonate facility is also on track for commissioning by June 2028, supported by a strategic agreement with Praxair India for an on-site HyCO plant.

    04

    Nitric Acid Plant Operational Challenges

    The nitric acid plant faced technical issues in Q4 FY26, leading to approximately 45% utilization. This necessitated securing nitric acid from the market to ensure continuous product manufacturing. Management is working with technology and equipment suppliers to resolve these issues and anticipates achieving the target EBITDA contribution of INR 90-100 crore once the plant operates stably.

    05

    Proactive Raw Material Sourcing and Market Strategy

    In anticipation of market volatility🌐, Deepak Nitrite strategically secured critical raw materials at favorable prices during Q4 FY26, resulting in a larger inventory than usual. The company also adjusted its sales model to dealership and CSA to manage outstanding receivables in a volatile market. For Q1 FY27, management expects performance to be better than Q4 FY26, both on a standalone and consolidated basis.

    06

    Impact of China's Chemical Industry Regulations

    Management highlighted that China's upcoming constraints on certain key chemistries, including production, storage, and transportation, are expected to create an uptick in demand and profitability for nitration products. This structural tailwind benefits responsible chemical manufacturers like Deepak Nitrite, which has a significant global market share in the nitration chain, as unsafe operations in China's nitration industry have been a recurring issue.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.