100% Dividends Latest, All-Time Gains Of 6,110%: Fertilizer Stock Is Medium Term Pick Of Prabhudas Lilladher

Fertilizer and chemical player in the smallcap basket, Deepak Fertilisers & Petrochemicals Corporation is a medium-term pick of brokerage Prabhudas Lilladher. This dividend-paying stock is currently a few rupes away from hitting a new 52-week high. The stock has witnessed significant correction in a year, forming a higher bottom formation. The stock has a positive bullish candle.

On Tuesday, the fertilizer stock ended at Rs 692.40 apiece, up by 0.7% with a market cap of Rs 8,740.71 crore on BSE. In the trading hours, the stock had crossed its Rs 700 mark to touch an intraday high of Rs 705.10 apiece.

Currently, the stock price is moving closer to its 52-week high level of Rs 722 apiece and is trading higher by 35% from its 52-week low of Rs 512.80 apiece.

Broadly, the stock's yearly performance has been flat. But in 5 years, the stock emerged as a multi-bagger with gains of nearly 400%. Its all-time upside is a whopping 6,110% since early 1996.

Although, Deepak Fertilizers have not declared any stock split and bonuses since 2000, but the company has a strong track record of paying huge dividends. As per Trendlyne data, since June 2001, the company has delivered 23 dividends.

In the last 12 months, the company paid up to 100% dividends amounting to Rs 10 per share. Currently, at the latest market price, the stock price has a dividend yield of 1.44%.

While adding the stock to their medium-term pick, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher said, "Deepak fertilizer has been in a sideways movement for some time, hovering between the range of 600 and 700, and now has a positive bullish candle. Also making a higher bottom formation in the daily chart."

Koothupalakkal added, "There is a gradual and steady upward move in the stock, and from here on, we anticipate it to move further to 800 levels."

Hence, the analyst said, "The RSI indicators have been favourable and are on the rise, and with decent volume participation, we recommend buying this stock with an upside target of 800 and a stop loss of 660."

Deepak Fertilizers is among India's leading manufacturers of industrial chemicals and fertilisers. With a strong presence in Technical Ammonium Nitrate (mining chemicals), Industrial Chemicals and Crop Nutrition (fertilisers), the Company supports critical sectors of the economy such as infrastructure, mining, chemicals, pharmaceuticals and agriculture.

DFPCL is a publicly listed, multi-product Indian conglomerate and has plants located in four states, namely Maharashtra (Taloja), Gujarat (Dahej), Andhra Pradesh (Srikakulam) and Haryana (Panipat). ICRA has upgraded DFPCL & STL 'Long Term' Credit Rating to AA- with a Stable outlook. 'Short Term' Credit Rating is also affirmed to A1+ (Highest Rating). DFPCL is the Leading manufacturer and marketer of Iso Propyl Alcohol (IPA) in India and the Largest Manufacturer of Nitric Acid in Southeast Asia. The Company is developing specialised grades of Nitric acid and IPA to meet specific requirements to cater needs of the industry/consumer.

The company is also one of the leading manufacturers of Technical Ammonium Nitrate in the world, it is the only producer of prilled TAN solids in India and also manufactures medical-grade Ammonium Nitrate. The Company has commenced best-in-class Technical Services to drive downstream productivity benefits for the mining end consumers.

In Q2 of FY24, the company's operating revenue stood at Rs 2,424 crore, lower from Rs 2,719 crore in Q2FY23. Also, operating EBITDA tumbled to Rs 286 crore in Q2FY24 versus Rs 495 crore in Q2FY23. Notably, the Q2 FY24 Chemicals Segment contributed 89% of total segment profits. Similarly, PAT too declined sharply to Rs 63 crore on a consolidated level in Q2FY24 versus Rs 276 crore in Q2FY23.

Sailesh C. Mehta, Chairman & Managing Director said in November month said, "Our focus in H2 FY24 remains on navigating through market challenges whilst emphasising our unique product offerings, industry leadership position and market resilience."

Deepak Fertilizers expect TAN domestic demand to improve further based on growth in coal, cement and steel production. New export potential opportunity opens up with the recent lifting of the export ban by the Government of India. FGAN Black Sea prices are expected to improve in conjunction with urea and Ammonia prices going forward.

While its Nitric Acid demand is stabilising and is expected to improve. The improvement in Ammonia prices in the near term is expected to support price stability in the Nitric Acid market. The prices of Isopropyl Alcohol (IPA) are anticipated to maintain their current trajectory.

Further, looking ahead in the fertilisers business, given the erratic monsoon and lower reservoir levels in the few markets, crop sowing and yield may have some impact. Acceptance of impactful yield improvements with Crop Specific grades is increasing, allowing stabilisation of higher premiums.

For its Ammonia Greenfield plant, Deepak Fertilizers expects substantial forex savings through import substitution, besides beautifully aligning the company with the India growth story and supporting the China-plus one strategy.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.