Key takeaways from investing accelerator summit
By , Ishmohit Arora (SOIC/ Persistence Capital), has excellent business insights on Deepak Fertilizer
1.Whenever business margins become consistent despite the volatility in the past, then those businesses create huge wealth for investors. Past examples, like Neuland and Garware Hi hi-tech
2. In Deepak Fertilizers, the volatility of the margins is going down as business is getting backward integrated.
3. Here, the product mix is changing from fertilizers to mining chemicals and industrial chemicals; the fertilizer revenue contribution has come down from 80% to 45% now.
4. In the TAN business, they are moving forward with integrating explosive chemicals, similar to Solar Industries.
5. Their margins are becoming consistent to 18–20%.
6. After the capex, they will have the capacity to meet 60% of India’s domestic requirements.
7. Fundamental triggers are ammonia prices going up, TAN spreads increasing,and support from the government with an increase in import duty
8. During FY25, they can do 950 to 1000 crore PAT if commodity prices remain stable; so they are trading at a 12-13x PE ratio.
Link below
https://twitter.com/ias_summit/status/1826865267802079408?t=5miKuCDO0rgzp_Q3Iytxbg&s=19
Disc – holding, not a buy/sell recommendation
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