Wednesday, January 20, 2010


CMP Rs 122 EPS Rs 16.86 (FY09) Book Value Rs 91 D/E Ratio 0.75

  • Deepak Fert & Petrochem (DFPCL) manufactures Methanol, various grades of Nitric Acid, Iso Propyl Alcohol, Carbon dioxide and Hydrogen. With a capacity of 70,000mtpa, it is the only company in India to manufacture IPA (Iso Propyl Alcohol),a solvent with primary usage in the electronics and pharma industry and its products are benchmarked against the best in the world with world class manufacturing and quality standards. The domestic demand is roughly in the same range and no competition is foreseen going forward. Its IPA plant is certified by US Pharmacopoeia.
  • Moving from fertilisers to being a complete provider of nutrients to the Indian farmer, its Mahadhan Saarrthie Centres reach out to nearly 5000 farmers across Western India. The Mahadhan and Bhoodhan brands are among the best known fertilisers in the country. DFPCL markets its products through a network of over 1000 dealers.
  • It is the only player in the country with the capability to manufacture prilled ammonium nitrate. Prilled ammonium nitrate decreases the transportation and storage cost significantly and has use in
  • explosives. The company is putting up another plant of 300,000mtpa capacity at Taloja with an investment of Rs6.3bn. The plant should be in full production by Q3FY11.
  • With expansion of TAN capacity and possible forays into new business segments (ammonia derivates, mining consultancy, micronutrients), the company presents an exciting future going forward. The company has been supplying ammonium nitrate for the mining industry. With the expertise gathered, it is planning to venture into mining consultancy in over-burden stripping related work. The company is currently in talks with MNCs for technology partnership.
  • Gas availability has improved with the Company now in a position to source nearly 90% of its requirement from a variety of gas suppliers. The company uses roughly 1mmscmd of natural gas. The usage is primarily in manufacturing methanol, nitrogenous fertilizers and generating power. While the company uses APM gas for fertilizers and power generation, the rest of its needs are met by R-LNG from Hazira and gas from GAIL.
  • DFPCL owns Ishanya, India's largest Design Centre and Specialty Mall. Ishanya is a pan-India destination for consumers shopping for the home or the office, the specialty retailers, the architect,  space designer, or the builder / developer. With 5,50,000 square feet of retail and services space, Ishanya is a single sourcing point for over 52 categories of products and services, materials and knowledge, drawn from across the best in India and across the globe. It offers over 100 outlets, over 5,000 brands and services plus a knowledge and research centre, mock up and simulation centres and a creativity centre. Its range offers choices right from the ultra-designer league to the cost-competitive. Concept Ishanya -
  • In the last 5 years Deepak Fert has never missed a dividend, at current price of Rs 122 also the dividend yield is quite strong at 3.27% (Last dividend paid in July-2009 Rs 4/- per share)
Technical Outlook:-
Stock of DEEPAK FERT has been in a consistent up trend and has so far outperformed the broader market. The stock has broken out above Rs 110 which has been a big resistance for the last 20 months and now the stock has started trading in large volumes also. The target can be Rs 151 for the stock in current up trend and one can accumulate this stock for investing.

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