Deepak Fertilisers shares can deliver 40% upside from current levels, Emkay says with 'buy' rating

Shares of Deepak Fertilisers and Petrochemicals Corporation Ltd. gained 2.5% on Wednesday, November 19, after brokerage firm Emkay initiated coverage on the stock and projected a 41.5% potential upside from its previous closing price.

Emkay has initiated a "buy" rating on the stock with a price target of ₹2,000 per share. The stock ended the previous session at ₹1,413 apiece. This is the second-highest price target on the stock among the five analysts who cover the stock. All five analysts have a "buy" rating on it.

The brokerage is positive on Deepak Fertiliser as it is a leader in domestic markets, its product portfolio aligns with India's growth story, and that its demerger plans in the next couple of years will lead to value unlocking, among other reasons.

Emkay said Deepak Fertiliser is a leader in mining and industrial chemicals, with a lion's share in domestic markets. It is also the market leader in water-soluble fertilisers.

The company's product portfolio is well-aligned with India's growth story and it has plans to move from commodity to specialty offerings across existing product portfolios, Emkay said.

In May this year, the company told CNBC-TV18 that it is doubling down on its specialty product portfolio and capacity expansion to drive both growth and profitability in the coming year.

The brokerage said the technical ammonium nitrate (TAN) expansion in Gopalpur, nitric acid (NA) expansion in Dahej and the Equinor contract's pricing benefit in ammonia manufacturing will drive at least 50% earnings before interest, tax, depreciation and amortisation (EBITDA) growth over the financial year 2026-28.

Emkay said Deepak Fertilisers has restructured its businesses into different entities — Deepak Mining Solutions Ltd. (DMSL) for mining chemicals and Mahadhan Agritech Limited (MAL) for crop nutrition — which it plans to demerge in the next two to three years. This will lead to value unlocking and multiple re-rating across businesses, Emkay added.

Shares of Deepak Fertilisers were up 2.5% at 1,448.2 apiece just after market open on Wednesday. It has gained nearly 19% this year, so far.

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