Deepak Nitrite shares’ multiyear rally ended last year, should investors be worried?

Shares of Deepak Nitrite have delivered flat returns in 2022. The stock, which closed at Rs 2,489.5 on December 31, 2021, ended at Rs 1,985.65 on December 30, 2022.  Before this, the stock had stellar returns in 2021 and 2020. The share ended at Rs 942.4 on December 31, 2020 and rose 164% returns in the next one year. In the last three years, the stock has zoomed 411% and gained 738% in five years. However, the shares of chemical manufacturer have consolidated in 2022. The stock has struggled to break out from the narrow range during the period.

Deepak Nitrite stock has a one-year beta of 1.2, indicating high volatility during the period. Deepak Nitrite is trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. Deepak Nitrite has a high PE ratio of 29.75 against the industry PE of 26.26.

In the current trading session, the Deepak Nitrite stock fell after three days of gain. In the afternoon session, the stock fell 1.14% to Rs 1,976 against the previous close of Rs 1,999.25 on BSE. The stock touched an intraday high of Rs 1,971 on BSE.  Earlier, it opened on a flat note at Rs 2,000. Total 0.13 lakh shares changed hands amounting to a turnover of Rs 2.49 crore on BSE. Market cap of the firm rose to Rs 26,948 crore.

The stock hit a 52-week high of Rs 2,690 on January 18, 2022 and a 52-week low of Rs 1,682 on  July 1, 2022 on BSE.

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In the second quarter of the current fiscal, Deepak Nitrite logged a 31 per cent fall in its consolidated net profit to Rs 174.47 crore against net profit of Rs 254.34 crore for the quarter ended September 30, 2021.  However, sales climbed 16.67% to Rs 1961 crore in Q2 from Rs 1681 crore a year ago.

Here’s a look at what analysts said on the prospects of the stock this year.

Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher said, “The stock has slipped recently from around  Rs 2250 levels and has a near term support zone near  Rs 1880 where it has indicated a pullback. We anticipate a further upward in the coming month and can retest the  Rs 2250-2300 zone with chemicals and fertilisers sector likely to perform before the Budget session. So technically, the levels near  Rs 1860-1880 has strong support and we can expect a rise with the RSI also indicating a trend reversal from the highly oversold zone on the daily chart. A decisive breach above  Rs 2350 levels would further strengthen the trend and can open the gates for fresh upward move for further targets of  Rs 2700 and  Rs 2900 on longer-term time frame.”

Abhijeet from Tips2trade said, “Deepak Nitrite has a strong resistance at  Rs 2006 on the daily charts. Investors can buy on a close above  Rs 2006 for targets of  Rs 2150-2265. Support will be at Rs 1880.”

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