Deepak Nitrite surges 4.8% after double upgrade from Morgan Stanley
Deepak Nitrite surged 4.8% after Morgan Stanley gave a 'double-upgrade' in its rating on the stock to overweight. The brokerage set a price target of ₹2,985 on the stock, implying an upside of about 16% over its Monday closing price of ₹2,560.5.
The brokerage said Deepak Nitrite is in the midst of its largest investment cycle, transitioning into India's largest, integrated phenolics producer.
«Growth investments across India's chemicals space are viewed favorably by investors and the market has significantly re-rated DPNT (Deepak Nitrite) in the past, 12-18 months prior, in anticipation of a capex-led earnings upgrade cycle,» said Morgan Stanley analysts Vivek Rajamani, Mayank Maheshwari and Pranitha Shetty in a client note.
«In coming quarters, we expect incremental clarity on these investments, while start up of operational upgrades, capacity debottlenecks and backward integration initiatives and bottoming in the base businesses underpin the next leg in DPNT's value creation journey.»
Morgan Stanley said Deepak Nitrite's new (largest yet) investment cycle could drive the next leg of re-rating, similar to the five times 'value creation' seen in 2016-19. «Coinciding with this capex cycle is a bottoming of the base business, operational and volume enhancements and a strong balance sheet.»
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