DEEPAK FERTILISERS

DEEPAK FERTILISERS - CMP 109 - BUY

Deepak Fertilisers is a very interesting long term story on - Plant nutrients [NitroPhoshphate Fetilisers], Specialty chemicals [Iso-Propyle Alcohal], Explosive intermediates [Ammonium Nitrite] and real estate [Ishnya Mall, Pune].

With supplies of gas commencing soon, the cost of all products [except IPA] will come down and utilisation levels which are right now below 70%, could be raised close to 80-90% by next year. So this event it self will boost the prospects of Company significantly, with major benefit coming in next full year, and partially in second half.

Further, the gas supplies will lower the cost of Ammonium Nitrate also, boosting margins further in this product, where demand outlook is very positive, looking to strong demand potential for mining explosives. Company is also setting up a Greenfield capacity, which will commence by Mid'09 quadrupling the capacity. Ammonia plant capacity was recently raised, which will also boost volumes.

Ishnya Mall at Pune is complete and will be operational by Deepawali, almost 80% of Space has been leased out and rest will be leased by year end. Overall full year, revenue expectations from lease /Rentals for '08-09 is Rs 40 Crs.

For long term investors, the stock could be a multibagger.

In short to medium term we expect stock to touch Rs 145 to 165.