Deepak Fertilisers share price: Stock surges over 7 pc – Know why

Deepak Fertilisers share price: Shares of Deepak Fertilisers and Petrochemicals Corporation Ltd on Tuesday surged over 7 per cent in early trade after the speciality chemical firm entered into a long-term supply deal with a Norway-based energy firm Equinor for Liquefied Natural Gas (LNG).

Deepak Fertilisers stock was trading 7 per cent higher at Rs 528.60 apiece on the BSE at around 1050 hours. The stock hit its intraday high of Rs 546 apiece.

The industrial chemicals and fertilisers producer’s share, however, was still quite far away from its 52-week high level of Rs 715 hit on December 19 last year.

“With this tie-up, Deepak Fertilisers strengthens its value chain with an attractive long-term LNG contract to solidify its value chain from Gas to Ammonia to various downstream Fertilisers, Industrial Chemicals and Mining Chemicals. This end-to-end tie-up shall establish a strong long-term foundation for all of DFPCL’s product segments,” the company said in a BSE filing.

Deepak Fertilisers shares have fallen over 23 per cent this year due to poor show in Q3 results. Its Q3 consolidated profit was down 76 per cent YoY at Rs 61 crore. Sales dropped 33 per cent to Rs 1,853 crore.

Deepak Fertilisers’ agreement with Equinor

The LNG deal, which was signed by Irene Rummelhoff, Executive Vice President, Equinor, and Sailesh Mehta, Chairman & Managing Director, Deepak Fertilisers, is one of the largest contracts signed by the Norwegian firm with any private sector firm in India.

Under this agreement, the Norwegian company, Equinor, will supply up to 0.65 million tonnes of LNG annually over a period of 15 years, starting 2026.

“The tie-up provides room for trading some LNG parcels in the growing LNG demands in India as well as accommodating DFPCL’s growing captive needs. The LNG will be delivered to the west coast of India. DFPCL is at an advanced stage of tying up the Regasification Terminal with the Gas pipeline grid connectivity to its plant’s doorstep already in place,” Deepak Fertilisers said in the filing.

The deal encourages the companies to further collaborate on petrochemicals feedstocks and strategic decarbonization pathways in the future, the company further said.

Talking about this deal, Mehta said, “We are very happy to enter into this long-term agreement with Equinor for supply of LNG. This will put on a solid footing Deepak Fertilisers value-chain right from Gas to Ammonia to building block Nitric Acids to downstream Fertilisers, Mining Chemicals and Industrial Chemicals, helping it to absorb Global volatility as well as enhance overall margins. We also look forward to exploring with Equinor, strategic tie-ups in our Chemical Business, as well as carbon footprint reduction initiatives.”

Deepak Fertilisers’ new ammonia plant will provide new, domestic fertiliser supply to India, Equinor said.

“We are proud to provide its feedstock in the form of natural gas. We look forward to further developing our relationship with Deepak on feedstocks and low carbon initiatives in the future,” Equinor’s Senior vice president for Gas & Power Helge Haugane said.