Deepak Chem Tech Limited, a wholly owned subsidiary of Deepak Nitrite , has issued and allotted 1,20,00,000 9% Optionally Convertible Redeemable Preference Shares (OCRPS) to Deepak Phenolics Limited (DPL) for an aggregate consideration of ₹120 Crores. The shares, having a face value of ₹100 each, were allotted at par on May 30, 2026, to strengthen the capital base of Deepak Chem Tech Limited and support project expenses and general corporate purposes.

The transaction was classified as a Related Party Transaction under the relevant provisions of Indian Accounting Standards and the Companies Act, 2013, as both entities are wholly owned subsidiaries of Deepak Nitrite Limited. The allotment was conducted on an "arms length" basis. No governmental or regulatory approvals were required for the investment, which was settled via cash transfer through normal banking channels.

Deepak Chem Tech Limited operates plants for Fluorination, Nitric Acid, Nitration, and Hydrogenation in Gujarat. The infusion of funds is intended to support the entity's ongoing projects across various sites in the state. Prior to this allotment, the paid-up capital of Deepak Chem Tech Limited stood at ₹2384.50 Crores, comprising ₹499.50 Crores of Equity Shares and ₹1885 Crores of Preference Shares.

Following the allotment, Deepak Nitrite Limited continues to hold 100% of the Equity Share Capital of Deepak Chem Tech Limited. Along with DPL, it indirectly holds 100% of the Preference Share Capital. The turnover of Deepak Chem Tech Limited has increased significantly over the past three fiscal years, reaching ₹172.23 Crores in FY 2025-26 compared to ₹9.43 Crores in FY 2024-25 and ₹0.86 Crores in FY 2023-24.

Deepak Chem Tech Limited Financial Overview

Morgan Stanley has reaffirmed its Overweight rating on deepak nitrite with a target price of ₹1842, following a strong Q4 earnings performance that surpassed expectations. The brokerage attributed the beat primarily to robust results in the advanced intermediates and phenolics segments, with core EBITDA doubling on a year-on-year basis.

Q4 Performance Highlights

The Q4 results underscored the strength of Deepak Nitrite's core business segments. The following table summarises the key rating and valuation parameters highlighted by Morgan Stanley:

The earnings beat was driven by the strong showing in advanced intermediates and phenolics, which are key contributors to the company's overall profitability. The doubling of core EBITDA on a year-on-year basis reflects a meaningful improvement in operational efficiency and product mix during the quarter.

Outlook for Q1FY27

Morgan Stanley expects sequential earnings improvement in Q1FY27, underpinned by several structural and operational factors. The brokerage identified the following key drivers supporting the positive outlook:

• Feedstock access: Improved availability of key raw materials is expected to support production continuity and margin stability.
• Backward integration: The company's ongoing backward integration initiatives are anticipated to enhance cost competitiveness.
• Favourable demand dynamics: Constrained chemical supplies from China are expected to create a supportive demand environment for Deepak Nitrite's product portfolio.

These factors collectively position the company to build on its Q4 momentum in the near term, according to Morgan Stanley's assessment.