Deepak Nitrite share price was trading firm in today’s session and the stock is looking technically strong at current levels. Deepak Nitrite stock is hovering around its 52-week high of Rs 2356. The stock was trading one percent higher in today’s trading session with intraday high of Rs 2307. The stock has gained nearly 4.2 percent over the last five trading sessions.

In August 9 reports, HDFC Securities has suggested SELL Call for Deepak Nitrite with target price of Rs 1403 which is much lower compared to current valuation of the company. HDFC Securities research report adds, “We maintain SELL on Deepak Nitrite (DNL), with a price target of INR 1,403 (WACC 12%, terminal growth 4%). The stock is currently trading at 24x FY25E EPS. We believe that (1) high input, utility and logistic costs will continue to put pressure on the company’s margin and (2) further growth in DPL is capped as the phenol plant is already running at over full capacity. EBITDA/APAT were 37/32% below our estimates, owing to a 6% fall in revenue, higher-than-expected raw material costs, and higher-than-expected other expenses, offset by lower-than-expected depreciation and higher-than-expected other income.” Despite negative ratings from HDFC Securities, Deepak Nitrite has gained 12.6 percent over the last one month.

ICICI Securities issued BUY Call for Deepak Nitrite in June 2023 with target price of Rs 2390. The stock is already inching towards the target suggested by ICICI Securities.

Deepak Nitrite is a professionally managed company. The company has reported strong growth over the last few quarters and the share price has reflected this. However, the company could face pressure on margins which could lead to decline in stock valuations. Many research reports think that Deepak Nitrite is overvalued but if the company continues on growth path, we could see it getting rewarded by long term investors.

Value investor Vijay Malik has suggested that investors should remain cautious about Deepak Nitrite, “The company has acknowledged that the recent spurt in its performance is due to temporary supply chain disruptions at the international level and the current high-profit margins of some of its products may not sustain going ahead. Therefore, an investor should be cautious while projecting the currently improved performance parameters into the future.” The company has witnessed strong profit margins but they may not be sustainable as market conditions change.

All investments in stocks should be made after conducting due-diligence. Stock markets can offer higher yields compared to other investing options but the risk is also high. Long term investments in stock markets generally outperform other investment streams in case the investment is made in reliable companies with strong performance and stellar management. TopNews provides information for investing community but due diligence should always be conducted before making investment decisions.