DEEPAK NITRITE LTD - Quantamental Equity Research Report

Quantamental Equity Research on DEEPAK NITRITE LTD | Release: 07 Dec 2018 15:11:08 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:DEEPAKNTR and BSE CODE:506401
Last Close:  INR 239.95
Fair Value:  INR 157.65
Est. Price by Mar 19:  INR 83.6
Market Capitalization (INR Crs):  3272.75
Industry:  Commodity Chemicals
Rating:  STRONG SELL
Downside:  -34%
Company Profile
Deepak Nitrite is a chemical manufacturing company. The Company offers Sodium Nitrite, 2 Ethyl Hexyl Nitrate and Optical Brightening Agent (OBA). The Company's segments include Bulk Chemicals and Commodities (BCC), Fine and Speciality Chemicals (FSC), and Fluorescent Whitening Agent (FWA).
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 18% 62% 105%  
EBIT % -10% 55% 156%  
Earnings % -25% 56% 121%  
Book Value %  29% 173% 238%  
Stock Total Return %  86% 261% 845%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 44.63  
(B) FII/FPI 10.50  
(C) DII/Insurance Companies 13.50  
(D) Public holding < 2 lakhs of cap. 16.52  
(E) Others 14.85  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 16 18 16 27 48 71 69 138 257 84 102 121 139 161  
Return on Equity 9% 11% 9% 14% 13% 15% 14% 15% 9% 10% 11% 12% 12% 13%  
Price to Earning  4.1 3.7 3.6 3.8 6.5 13.9 12.2 16.3 42.0 10.9 10.9 10.9 10.9 10.9  
EVTI 0.3 0.2 0.4 0.5 0.6 1.0 0.9 1.5 2.4 0.7 0.7 0.7 0.7 0.7  
EVTIFM 4.1 3.7 3.6 3.8 6.5 13.9 12.2 16.3 42.0 10.9 10.9 10.9 10.9 10.9  
Price to Book Value 0.4 0.4 0.3 0.5 0.8 2.2 1.7 2.5 3.7 1.1 1.2 1.3 1.4 1.4  
Debt to Equity  0.4 0.3 1.0 1.2 1.7 1.6 1.0 0.8 0.5 0.5 0.5 0.4 0.3 0.1  
Dividend Yield 6% 7% 8% 6% 4% 1% 2% 1% 1% 2% 2% 2% 2% 2%  
Cash Flow to Firm 47% 44% -60% -11% -17% 4% 16% 4% 5% 5% 8% 11% 19% 20%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales       1,454.98       1,794.33       2,130.63       2,432.36       2,665.40       2,798.67  
EBITDA          215.90          264.42          313.98          358.45          392.79          412.43  
EBIT          163.95          200.36          241.75          280.32          311.87          340.07  
PBT          122.08          158.49          193.21          228.76          262.37          305.53  
NPAT            83.46          104.62          127.54          151.00          173.19          201.68  
Price to Earning             42.01            10.90            10.90            10.90            10.90            10.90  
Price to Book Value              3.71              1.11              1.23              1.32              1.36              1.42  
Debt to Equity               0.49              0.52              0.50              0.44              0.27              0.12  
Return on Equity              0.09              0.10              0.11              0.12              0.12              0.13  
Enterprise Value to Total Income (EVTI)              2.40              0.68              0.70              0.71              0.68              0.68  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            34.36            10.15            10.36            10.32              9.69              9.42  
Price or Est. Share Prices          257.07            83.60          101.95          120.75          138.50          161.30  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT          158.49          193.21          228.76          262.37          305.53  
Interest            41.87            48.54            51.56            49.50            34.54  
Depreciation            64.07            72.23            78.12            80.92            72.36  
Cash Flow Before Tax          264.42          313.98          358.45          392.79          412.43  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax          174.54          207.26          236.61          259.28          272.24  
Terminal Cash Flow                                                                                      -         3,829.04  
Total Cash Flow          174.54          207.26          236.61          259.28       4,101.28  
Present Value of Cash Flow       2,328.23  
Debt          178.56  
Value of Equity       2,149.67  
Fair Value Per Share          157.65  
Equity            3,273
Debt               462
Beta Take from Reuters 1.76
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid                 42
Tax Benefit                 13
Interest Net of Tax                 29
Debt               462
Cost of Debt 6%
Cost of Equity 20%
Debt Weight 12%
Equity Weight 88%
WACC 18%
Cash Flow of Mar-23 E          272.24
Growth 8.9%
Present Value of Terminal Cashflow       3,829.04
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Tata Chemicals           668.90          17,041          444.96            13.74            11.38              1.27            16.15              1.50              7.10              0.55              3.29            10.58              8.47          12,485            30.63               106              7.88            10.05            56.20             -1.77          982.35
   2  Pidilite Inds.        1,134.70          57,637            70.36            31.96            37.64              7.89            66.71            16.13            60.40              0.03              0.53            21.84            31.43            7,140            69.74               283             -4.18            14.88             -2.95             -8.05          172.24
   3  Guj Fluorochem           876.65            9,634          483.80            56.54              7.94              1.80              4.76              1.81            13.40              0.42              0.40            47.96            36.07            6,076            68.34                 23              8.80            69.00          269.23          584.88          854.58
   4  Castrol India           146.95          14,535            10.80            67.70          105.28              3.64            25.59            13.61            20.97                  -                4.76             -0.06             -0.06            3,782            51.00               110             -8.88              7.60             -8.40             -5.76            41.27
   5  Godrej Inds.           542.60          18,252          124.72            17.65              9.33              1.78         -620.42              4.35            41.55              1.76              0.32            15.19            18.13          11,528            74.72              -149           -13.43            14.76            72.24            72.13          192.97
   6  Deepak Nitrite           239.95            3,273            71.31            15.06            12.23              1.87            23.06              3.37            36.16              0.49              0.54            11.86            15.05            1,732            44.63               118              2.78            21.89            28.88            23.71          103.91

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