Deepak Nitrite shares reverse gaining trend after Morgan Stanley turns sceptical on stock

Deepak Nitrite shares reversed yesterday’s gaining momentum and slipped more than 3 per cent during Thursday's session on the exchanges after Morgan Stanley turned sceptical on the speciality chemical firm’s plans to invest around Rs 5,000 crore in Gujarat projects.

Deepak Nitrite stock was quoted at Rs 2,066.05 per share, down Rs 70.35 or 3.29 per cent at around 11:20 on Wednesday as compared to the previous day’s closing of Rs 2,136.40 a share on the BSE.

Deepak Nitrite's wholly-owned subsidiary Deepak Chem Tech Limited on May 24 signed a contract with the Gujarat government to invest around Rs 5,000 crore in the next four years for setting up various projects, the company said in its release.

The company further stated that it aims to manufacture speciality chemicals, phenol/acetone and bisphenol at Dahej and Nandesari in Gujarat. It pointed out the proposed investment is expected to generate around 1,500 direct and indirect employment opportunities.

The pharmaceutical and agrochemical industries rely on speciality chemicals to meet their needs. Acetone and phenol are utilised in a variety of end-user industries, including laminates, plywood, pharmaceuticals, paint, and adhesives.

Global brokerage firm Morgan Stanley has given an underweight rating on Deepak Nitrite with a reduced target price of Rs 1,714 apiece. It said, “India chemical incumbents have raised investment intensity in the last 2 years and the announcement highlights increasing focus to improve India’s self-sufficiency.”

On Wednesday, the shares of a speciality chemical firm jumped as high as 10 per cent immediately after the company’s investment plan in Gujarat.

Deepak Nitrite share price history

Deepak Nitrite shares in the last one year have gained over 11 per cent as compared to 14 per cent rise in the Nifty index. Year-to-date, the stock was up 3.5 per cent against the flat Nifty50.