InvestorQ : Reason of falling Deepak fertilizer
v Krishna made post

Reason of falling Deepak fertilizer

Answer
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Riya Dwivedi answered.
1 year ago


You are right that the stock price of Deepak Fertilizers has fallen very sharply from around Rs.290 to Rs.92 over the last one year. Deepak Fertilisers is a producer of fertilizers and industrial chemicals and it has a product portfolio comprising industrial chemicals, bulk, and specialty fertilizers, farming diagnostics and solutions, fresh produce, technical ammonium nitrate and value-added real estate. The company had a weak 2019 because its operating EBITDA fell from Rs.545 crore to Rs.459 crore while its PAT fell from Rs.164 crore to Rs.73 crore. The debt-equity touched a high of 1.73 in 2018 but came down to 1.50 in 2019.
The real trigger for the correction came first form the high debt levels and the weak operating performance. However, there were also subsequent reports on the company defaulting on some of its commercial paper due to a cash shortfall. However, the company has clarified that it has been repaying commercial papers in accordance with the due dates and it has repaid its last commercial papers on the due date. However, with weak end markets, the pressure on the stock continues. The stock has potential but it would be better to wait till this issue of cash shortfall is suitably addressed.