Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deepak Nitrite Ltd (BOM:506401, Financial) has commenced its foray into advanced materials, aligning with its long-term strategic plan.
- The company has secured a technology partnership for the production of polycarbonate resins, marking a significant milestone.
- Consolidated revenues grew by 14% year-on-year for Q2 and 18% for H1, driven by strong growth in the phenolic business.
- The company maintains a zero debt position on a net basis, with a net worth of 5,125 crores.
- Deepak Nitrite Ltd (BOM:506401) is expanding its downstream integration, which is expected to enhance its product portfolio relevance.
Negative Points
- Business sentiment remained mixed due to geopolitical uncertainty, high interest rates, and volatile crude oil prices.
- The advanced intermediates segment faced muted realizations and challenges from key agrochemical customers, impacting profitability.
- Logistical challenges due to increasing freight rates and sailing times exacerbated market conditions.
- The company faces competition from persistently low-priced products available from China, preventing broader recovery.
- Heavy monsoon and volatility in fuel prices posed operational challenges during the quarter.
Q & A Highlights
Q: Can you provide details on the polycarbonate project, including upstream capacities for BP and POL?
A: (CEO) We are linking POL expansion and PNO, key intermediates for polycarbonates. We will update on investments and capacities soon. Our strategy ensures right-sized assets to meet internal consumption and India's growing demand.
Q: What is the status of the nitric acid project and its capacity?
A: (CEO) Pre-commissioning activities have begun. The capacity will meet current and future growth needs, with some market participation. Our strategy focuses on internal consumption and growth in nitrate products.
Q: Can you explain the rationale behind acquiring the German polycarbonate plant and its expected payback?
A: (CEO) The plant offers high-quality, mature technology with a strong safety record. The acquisition accelerates our timeline by 8-10 months. The plant's over-engineered assets provide comfort for future value extraction. The payback period is expected to be favorable.
Q: How much of the announced CapEx has been committed, and what are the plans for FY25 and FY26?
A: (CFO) We've committed around 7,000 crores out of the 14,000 crores planned until 2027. The remaining will be part of phase two, including BP and POL expansions. The CapEx will span the next three years.
Q: How does the current pricing pressure in advanced intermediates affect new product launches and margins?
A: (CEO) New products have agreements to pass through raw material cost changes, protecting margins. We expect margin expansion from Q4 onwards, driven by backward integration and strategic investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
