Deepak Nitrite (DEEPAKNTR)

FairStock Score: 65/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Five-year revenue CAGR of 13.69% demonstrates established growth and market acceptance.
• Low debt/equity of 0.23 provides financial cushion during cyclical pressure.
• Piotroski F-Score of 8/9 indicates strong fundamental health despite earnings decline.
• ROCE of 16.28% reflects decent capital efficiency in the core operations.
• Promoter holding of 49.33% aligns owner interest with minority shareholders.

Concerns

• Earnings quality: profit declined 28.79% and latest quarter net margin is only ~5% (₹100 Cr on ₹1,975 Cr sales).
• Valuation is rich: P/E of 39.77 and EV/EBITDA of 94.84 leave little room for error.
• Negative free cash flow of ₹864 Cr suggests cash generation is far below reported profits.
• P/B of 4.38 versus ROE of 9.89% means shareholders earn a low return on the price paid.

AI Analysis

When I study Deepak Nitrite, I ask whether I can confidently estimate its future earnings. The five-year revenue growth of 13.69% tells me this was once a compounding specialty chemical franchise, but the recent numbers cool that enthusiasm. Sales fell 3.43% and profit declined 28.79%. At ₹1,731.90, I am being asked to pay 39.77 times those shrinking earnings. That is a rich price for a business whose return on equity is only 9.89%. Graham taught me to weigh price against demonstrated earning power, and here the earning power is temporarily weak. The book value is ₹395.08, so I am paying 4.38 times book for an ROE below 10%; that arithmetic fails the value test. The Graham number of ₹589.48 underscores the gap—my margin of safety is negative 168%, which is not investing; it is speculation. Still, I see strengths. Debt to equity is just 0.23, so the balance sheet is sound. Piotroski score of 8/9 says operational fundamentals are better than the profit slump suggests. ROCE of 16.28% shows the core business can earn decent returns when conditions normalize. Altman Z of 3.79 also keeps bankruptcy risk low. But the negative free cash flow of ₹864 crore is hard to ignore—profits are not turning into cash. An EV/EBITDA of 94.84 makes the enterprise valuation extreme. For an Indian retail investor, patience matters. Watch whether sales and profit growth return, whether free cash flow turns positive, and whether ROE improves to justify the multiple. Until then, I would keep this on the shelf rather than buy.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer