Thread by @ajitsuryak

Deepak Fertilisers - Thread⚡️

Established in 1979, Deepak Fertilisers And Petrochemicals Corporation Limited(DFPCL) is one of India’s leading producers of fertilisers and industrial chemicals.

@caniravkaria @saketreddy @nakulvibhor @Jitendra_stock @AvadhMaheshwar2 @TSG_Capital

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Set up by Chimanlal K Mehta [Founder of Deepak Nitrite] as an ammonia manufacturer, the Rs 4,000 cr DFPCL is today run by his youngest son Sailesh Mehta, who is chairman & managing director of the company.  

The Company is headquartered in Pune.

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FY21 Sales - 5,800 cr
Revenue Breakup -Chemicals - 54%; Fertilisers - 46%
Profit- 944 cr
Chemicals contributed to 80% of the profits
OPM-16%
P/E-10.20
Promoters hold.- 55.80%
D/E - 0.88
Shares Pledged -15.3%

>>Promoters and FIIs have increased holdings in the last quarter

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The Company’s products are exported to 29 countries across six continents.

The Company possesses four state-of-the-art manufacturing facilities across India in Maharashtra (Taloja), Gujarat (Dahej), Andhra Pradesh (Srikakulam), and Haryana (Panipat).

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The Company is engaged in the manufacture of:

Industrial Chemicals (Nitric Acid, Iso Propyl Alcohol, Methanol, and Carbon Dioxide)

Crop Nutrition (Nitro Phosphate, Nitrogen Phosphorous Potassium variants, Water Soluble Fertilisers, and Bentonite Sulphur)

TAN (Mining)

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Key Clients:

TAN business - Long-term partnerships with key customers like Coal India, Adani, Tata Steel, Balco, and Hindustan Zinc

Cement and Mining - ACC, UltraTech, and Ambuja Cement

TAN to explosives makers like Solar Industries, IDL, GOCL, and Salvo Explosives.

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Key Clients:

Nitric acid:  Deepak Nitrite, Aarti Industries, Kutch Chemical Industries, Ordnance Factory Board, Jindal Steel, Rudraksh Chemicals

IPA:  Dr. Reddy’s Laboratories, Aurobindo Pharma, Mylan Laboratories, Hetero Drugs, Divis Laboratories, and Asian Paints

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In its crop nutrient business, DFPCL is the only manufacturer of high-efficiency fertilizers (NPK complex and Bensulf; commands premium), while it is a market leader in specialty and water-soluble fertilizers.

Total installed capacity of 957,000 tpa of fertilisers.

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In its industrial chemicals business (total capacity: 13,52,000 tpa), in which it services industries like pharma, consumer care, inks, coatings, and chemical derivatives, the company is the largest manufacturer of nitric acid (installed capacity: 11,16,000 tpa).

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In the mining chem. business, with a total installed capacity of 486,900 tpa, the company is the largest TAN producer in India, with a leading market share of 42%. It caters to sectors like explosives, mining, infrastructure and is the only producer of solid grade of TAN

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DFPCL has planned a major CAPEX of about 4,000 crore, putting up a greenfield project in Taloja for the production of ammonia (Capacity: 500,000 tpa!!)

68%-70% of DFPCL consolidated turnover depends on ammonia as a key raw material!

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The ammonia capacity, which is likely to be commercialized in the next 24 months, will add substantially to its existing Taloja capacity of 128,700 tpa and will help the company inadequately managing its raw material supplies.

Ammonia Imports in FY20 was around 5,000 cr!

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The company has also earmarked a new TAN capacity of 376,000 tpa in Gopalpur, Odisha. Estimated to cost about Rs1,800 crore, the project is likely to roll out in the next 24-36 months and will further strengthen its leadership position in the TAN market.

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With the continued and validated shift from Commodity to Speciality, Strategic ammonia and TAN expansion projects, operating leverage with manufacturing capacity headroom of 20 - 25%, and importantly with credible management, the company has the potential to grow further!

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Sources: Investor Presentation, businessindia.co/magazine/deepa…, Valuepickr, Research Reports, Screener