Some key updates:
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SGX has launched Ammonia Futures, citing other use cases of Ammonia (to make hydrogen) which can give us a sense of Ammonia Prices: Ammonia - Singapore Exchange (SGX)
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Average Ammonia Cost Quoted in Monthly Bulletin | Department of Fertilizers is 314 USD and looking at futures looks like in September was upwards of USD 400. This falls closer to profitable ranges for the new Ammonia Plant. Major supplier in Saudi Arabia Maaden has been in shutdown affecting spot ammonia availability. Although this is a weak quarter, the EBIDTA might get a good lift from ammonia profitability. Or at-least should be able to deliver the proof-of-concept for the same for the month of September.
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IPA prices have shot up by 30.0% on YoY basis and 40% in past 3 months. Deepak Fertilizers and Deepak Nitrite are the only domestic manufactures of these.
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Demerger to complete in Q3 as per management. Should unlock strategic investments and if re-listed offer tremendous upside. This is primarily because chemical businesses like IPAs and Mining should get much higher PE as they fall under speciality chemicals. Company is also working on solar nitric acid and steel grade nitric acid. TAN sales should pick up in Q3.
Markets are always forward looking, hence I believe there should be some upside in this stock soon. Looks promising on 1-year horizon.
Disclosure - Invested
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