Deepak Nitrite Navigates Headwinds with Strategic Resilience and Future-Focused Investments in Q2 & H1 FY26

Deepak Nitrite Limited, a leading Indian chemical intermediates producer, has demonstrated strategic resilience amidst a complex global operating environment, reporting a steady performance for the second quarter and first half of fiscal year 2026. The company's consolidated revenues for Q2 FY26 stood at ₹1,922 crore, showing a marginal quarter-on-quarter increase. This was accompanied by an improved profitability, with consolidated EBITDA rising 5% sequentially to ₹224 crore. For the first half of FY26, total revenue reached ₹3,836 crore, with an EBITDA of ₹438 crore, reflecting a challenging year-on-year comparison due to vastly different market conditions, including US tariffs and under-pricing in the previous year.

The Phenolics business segment emerged as a strong performer, delivering a 2% sequential revenue growth and a robust 23% quarter-on-quarter EBIT growth. This positive trajectory was fueled by higher throughput, increased volumes, a favorable product mix, and lower feedstock prices. The company achieved a record quarterly production and sales of Isopropyl Alcohol, underscoring its operational efficiency and market strength in this segment. In contrast, the Advanced Intermediates segment faced significant headwinds, primarily due to the direct and indirect effects of US tariff actions and the persistent influx of underpriced Chinese products. While the company managed to maintain largely stable revenues by pivoting to non-traditional geographies and proactive customer engagement, pressure on realizations severely impacted profitability in this segment. Management has initiated aggressive optimization actions to mitigate these impacts, with expected improvements in the coming quarters.

Strategic Thrust and Future Outlook

Deepak Nitrite's strategic vision is anchored in building an India-centric, import-substitution-driven business model, deepening integration, and embracing sustainability. A key highlight is the commencement of its hydrogenation asset at Deepak Chem Tech on September 26, 2025, a ₹118 crore investment. Furthermore, the company inaugurated its state-of-the-art Research & Development Centre at Savli on October 1, 2025, built with an investment of ₹100 crore across a 5-acre campus. This R&D center is poised to be an innovation hub, expanding the product portfolio, enhancing operational excellence, and fostering new chemistries in partnership with key customers. It will also support the development of 7 new products launched in Q2 FY26, which are expected to contribute significantly to future margins and volumes.

The company's robust pipeline of upstream products, including Nitric Acid, and downstream products like MIBK and MIBC, are slated for operationalization in the coming quarters. The Acid Unit and MIBK/MIBC Project are expected to be fully operational by Q4 FY26, ensuring assured supply of inputs and an improved margin profile. The ambitious polycarbonate project, India's first integrated facility, remains on track for commissioning by Q1 FY28, with a total outlay of ₹9,000 crore. This project represents a major advancement towards building a fully integrated value chain in phenolics, aligning with the 'Atmanirbhar Bharat' initiative.

Sustainability and Digital Leadership

Deepak Nitrite is also making significant strides in its commitment to sustainability and digital transformation. The company is transitioning towards achieving 60-70% of its energy consumption from renewable sources by FY27, embracing green chemistry to create safer and eco-friendly products. This initiative has already led to a significantly reduced emission score in H1 FY26. On the digital front, initiatives like SAP S/4HANA migration, AI/ML-driven smart manufacturing, and the establishment of a Digital Innovation Lab are enhancing operational efficiency, optimizing power consumption, and improving predictive analytics. These efforts are crucial in strengthening the company's competitive edge and long-term success.

In conclusion, Deepak Nitrite's Q2 and H1 FY26 performance underscores its ability to navigate a challenging global landscape with agility and strategic foresight. The management's unwavering focus on disciplined execution, significant investments in R&D and capacity expansion, and a strong commitment to sustainability and digital transformation position the company for sustained value creation and long-term growth. The ramp-up of new capacities and the potential easing of US tariffs are expected to drive improved performance in the second half of the fiscal year, reinforcing investor confidence in its future trajectory.