Deepak Nitrite came into the limelight once the share price of Deepak Nitrite had already generated multibagger returns. Most retail investors started accumulating shares of Deepak Nitrite once the share price crossed the 1,000 Rupees mark. But, few who invested in Deepak Nitrite in the early days are now sitting on a pile of cash.
So in this article, we will discuss how much return you would have generated if you had invested Rs. 10,000/- in Deepak Nitrite in 2015.
We will also briefly discuss how you can identify future multibaggers stocks and invest in them.
- Deepak Nitrite Share Price Since 2015
- Investing Rs. 10,000 in Deepak Nitrite in 2015
- Why is the Share Price of Deepak Nitrite Falling?
- How to Find Multibagger Stocks?
- Did We Invest in Deepak Nitrite?
- Fundamental Analysis of Deepak Nitrite
Deepak Nitrite Share Price Since 2015
First of all, let’s start by plotting the share price of Deepak Nitrite since 2015.
|Date||Deepak Nitrite Share Price||Dividend|
|1st January 2015||Rs. 82.85/-||Re.1.00|
|1st January 2016||Rs. 73.40/-||Rs. 1.20|
|2nd January 2017||Rs. 92.60/-||Rs. 1.20|
|1st January 2018||Rs. 230.25/-||Rs. 1.30|
|1st January 2019||Rs. 223.85/-||Rs. 2.00|
|1st January 2020||Rs. 374.75/-||Rs. 4.50|
|1st January 2021||Rs. 987.85/-||Rs. 5.50 (Incl. Spl Div)|
|3rd January 2022||Rs. 2,530.15/-||Rs. 7.00|
Investing Rs. 10,000 in Deepak Nitrite in 2015
If you had bought 125 shares of Deepak Nitrite on 1st January 2015 for Rs. 82.85/Share, then it would have cost you Rs. 10,356.25/-.
At the end of the year, your investment value would have plummeted to Rs. 9,193.75/-. Because on 31st December 2015, a single share of Deepak Nitrite was trading at Rs. 73.55/-.
Let’s fast forward six months.
On 1st June 2016, the share price of Deepak Nitrite was Rs. 84.30/-.
It has been one and a half years since you invested, and you are now sitting on a negligible profit of 1.75%.
Looking at your portfolio, you are trying to reconsider your investment decision.
Or your life decision, for that matter! 🤣
Jokes apart, you thought of standing by your conviction and didn’t liquidate your investment in Deepak Nitrite.
Now, let’s again fast forward six months.
It has been two years since your investment in Deepak Nitrite, and your investment is now showing an unrealized profit of 11.04%.
Because on 30th December 2016, a single share of Deepak Nitrite was trading at Rs. 92.00/-.
Ahh, finally, the days of gloom and doom are over!
As your investment is in the GREEN territory now, let’s fast forward by a year.
On 29th December 2017, the last trading day of the year, a single share of Deepak Nitrite was trading at Rs. 231.50/-.
It means your investment of Rs. 10,356.25/- in Deepak Nitrite has appreciated by 179.42% to Rs. 28,937.50/-.
In other words, your investment is about to get tripled.
Now you are thinking of liquidating your investment.
But you went through the results of the last few quarters. And now, rather than liquidating your holding, your conviction in Deepak Nitrite has increased.
Later in this article, we will discuss why the quarterly results of Deepak Nitrite should have strengthened your conviction.
Again, let us fast forward by a year.
On 31st December 2018, the price of a single share of Deepak Nitrite was Rs. 221.10/-.
It means your investment value is now Rs. 27,637.50/-.
Though your investment has not performed well in the last year and is down by 4.49% on a Y-o-Y basis, you still didn’t sell off your investment in Deepak Nitrite.
The reason behind not selling your investment was – From the highs of early 2018, the whole Midcap market was down by 14% to 15% by the year’s end.
In reality, your investment performed very well compared to the entire Mid-cap index by not falling as much as 15%.
Time to fast forward by another year.
On 31st December 2019, a single share of Deepak Nitrite was trading at Rs. 373.10/-.
It means your investment of Rs. 10,356.25/- in Deepak Nitrite has increased by 450.33% to Rs. 46,637.50/-.
In other words, you are about to 5x your investment.
Though the Midcap index was still in a downtrend, all you did was – Check the quarterly reports and the management’s guidance.
Now, let us steer the year 2020 a bit slowly as some significant events happened across the globe.
Let’s start with March of 2020.
On 2nd March 2020, the share price of Deepak Nitrite was Rs. 502.20/-.
It means your 125 shares of Deepak Nitrite have appreciated by 606.15% and are now worth Rs. 62,775/-.
In other words, you have more than 6x-ed your investment.
On the other hand, pandemic cases are slowly increasing in India and globally.
Let us fast forward by a few days.
On 12th March 2020, a single share of Deepak Nitrite was trading at Rs. 439.50/-.
That is a drop of 12.48% within ten days, and your investment value has dropped to Rs. 54,937.50/-.
And on the next day, we saw a Dead Cat Bounce as shares of Deepak Nitrite have sold off quite a lot from the top.
On 13th March 2020, shares of Deepak Nitrite were trading at Rs. 468.70/-.
Your investment value bounces up to Rs. 58,587.50/-, and you see these kinds of news in the background.
We can confidently say that 90% of the investors would have sold off their investment by this time.
There were no Fundamental changes in the company, or the quality of the business hasn’t deteriorated. People just sold out of the market out of sheer panic.
Though, the management of Deepak Nitrite gave a little relief to its investor in the form of Dividends.
On 16th March 2020, Deepak Nitrite declared an Interim Dividend of Rs. 4.50/Share.
It means you earned a total of Rs. 562.50/- in the form of dividends from your 125 shares of Deepak Nitrite.
Tough times were not over yet. Whatever courage you had to hold on to your investments, the market was about to extract every ounce of it!
Let’s fast forward to the end of March.
On 23rd March 2020, a single share of Deepak Nitrite was trading at Rs. 324.00/-. The share price of Deepak Nitrite went as low as Rs. 311.00/- within the trading day.
The next day, on 24th March 2020, the Nifty 50 index touched a low of 7511.10, down 38.44% on a YTD basis. It was sheer panic and bloodbath on Dalal Street.
Your 125 shares of Deepak Nitrite are now worth Rs. 40,500/-.
Your investment has lost more than Rs. 22,000/- in less than 30 days.
Now let’s talk about the courage of “HOLDING ON TO YOUR INVESTMENT DURING TOUGH TIMES”!
Most retail investors would have cleaned out their portfolios by now.
That is why you must invest money that you are willing to lose.
Let us move to the middle of the year.
On 1st June 2020, the share price of Deepak Nitrite was Rs. 504.40/-.
If you held on to your investment for dear life through the crash, then the value of your Deepak Nitrite shares is now Rs. 63,050/-. Up 55.67% from March’s low.
The crash was the time to pour more money into your portfolio, but that is what very few did. And this is one of the reasons why there is only one Warren Buffet in the world.
Hard times are over, and you have sailed through the storm. It is now time for some sunshine. 🌄
Let’s move to the end of the year.
On 31st December 2020, a single share of Deepak Nitrite was trading at Rs. 941.85/-.
Your investment of Rs. 10,356.25/- in Deepak Nitrite is now worth Rs. 1,17,731.25/-. It means you have 10x-ed your investment in Deepak Nitrite.
Do remember that this was the year of doom and gloom and uncertainties.
All you had to do was trust your own fundamental and company analysis and hold on to your conviction during tough times.
Let’s fast forward by a year. Again.
On 31st December 2021, shares of Deepak Nitrite were trading at Rs. 2,490.20/-.
Let us calculate how much your 125 shares of Deepak Nitrite are worth now.
125 Shares x Rs. 2,490.20/- Per Share = Rs. 3,11,275/-.
In other words, you have 30x-ed your investment. In terms of percentage, it would be more than 3,000% return on your investment in Deepak Nitrite.
The post-covid bull run ended in October of 2021.
And as of 23rd September 2022, a single share of Deepak Nitrite is trading at Rs. 2,163.70/-.
That is a fall of 13.11% from 31st December 2021. And your holding is now worth Rs. 2,70,462.50/-.
Why is the Share Price of Deepak Nitrite Falling?
The primary reason behind the fall of Deepak Nitrite’s share price and the 2022 bear case is the Eastern European crisis and worldwide out-of-control inflation.
The US economy is going through a rough phase with symptoms of a mild recession. And it directly impacts the Indian economy and its export market.
As the US Dollar strengthens itself due to global uncertainties and supply-chain issues, the Indian Rupee gets weaker.
And the Indian Stock Market and the US Dollar are inversely correlated to each other.
When the US Dollar rises, the Sensex drops like a stone.
Another reason is the US FED rate hike.
It causes the FIIs and the FPIs to pull out their investments from the Indian market. And this makes the Indian Stock Market and the Indian Rupee jump off the cliff.
This vicious circle can turn very ugly real quick.
The total Indian Stock Market is falling, and not just the share price of Deepak Nitrite.
How to Find Multibagger Stocks?
There are many things to consider when you are trying to find a future multibagger stock, but fundamental and management analysis is a good place to start.
The easiest way to find multibagger stocks is through tracking the portfolio of mutual funds that have consistently outperformed their category over a very long period.
Look for changes in the holding percentages in the recent past.
If the fund has aggressively increased its holding in a particular company’s stock, you can start by investigating that company.
If the fund has added a new name to the list of its holdings, try to find out what the fund manager saw in that company.
Why follow mutual fund portfolios?
Well, mutual funds have a whole analytical team behind every stock pick, which a regular retail investor can neither have nor afford.
We have discussed this process in detail here.
Also, screeners like screener.in can help you identify multibagger stocks.
You might come up with a long list of stocks to analyze following the mutual fund portfolios and screeners, and it might become impossible to investigate all of them comprehensively.
So a rejection list is far more crucial than an investment list.
One of the ways we at Money Premier reject stocks is by looking at the long-term chart.
Here is an example –
Below is the monthly chart of Deepak Nitrite, starting from 2011 till 2015.
And here is the monthly chart of the State Bank of India from 2011 to 2015.
Now according to you, which of the above two charts shows a consistent performance with near-to-none cyclicality?
Yes, it is the chart of Deepak Nitrite.
We would have rejected SBIN just by glancing at the long-term chart. We wouldn’t have wasted our time investigating that company.
Did We Invest in Deepak Nitrite?
Yes, we at Money Premier did invest in Deepak Nitrite. But, we invested in Deepak Nitrite in 2019 at the price of Rs. 286/- per Share.
We have an article dedicated to how we did it. You can read about it here.
Fundamental Analysis of Deepak Nitrite
While analyzing a company’s fundamentals, you need to look at plenty of things, but here we will examine five years of PnL Statements and Balance Sheets of Deepak Nitrite, starting from 2011 till 2015.
Let’s start with the PnL Statement of Deepak Nitrite.
Profit and Loss Statement of Deepak Nitrite
In FY 2010 – 11, the Total Income (Revenue) of Deepak Nitrite was Rs. 677 Crores.
By FY 2014 – 15, the Total Income has climbed up to Rs. 1,329 Crores.
It means that within five years, the company’s revenue has nearly doubled.
The Total Revenue of Deepak Nitrite grew at a double-digit CAGR of 14.43% between 2010 and 2015.
Now let’s take a look at the PAT (Profit After Tax).
In FY 2010 – 11, Deepak Nitrite realized a Total Profit or PAT of Rs. 25.80 Crores.
By FY 2014 – 15, the Profit After Tax of Deepak Nitrite has increased to Rs. 53.44 Crores.
In other words, Deepak Nitrite has more than doubled its profit within five years.
The PAT of Deepak Nitrite grew at a double-digit CAGR of 15.67% between 2010 and 2015.
Generally, when the PAT of a company doubles, the stock price moves up between 6 to 10 times.
The same happened with the stock price of Deepak Nitrite.
On 8th January 2010, shares of Deepak Nitrite were trading around Rs. 14/- per Share.
And on 9th January 2015, shares of Deepak Nitrite were trading at Rs. 82/- per Share.
Between 2010 and 2015, the share price of Deepak Nitrite appreciated by more than 580%.
Now let’s have a look at the Balance Sheet of Deepak Nitrite.
Balance Sheet of Deepak Nitrite
In the Equity section of the Balance Sheet, during FY 2010 -11, Deepak Nitrite had a Share Capital (Equity) of Rs. 10.45 Crores.
During the same time, the Net Worth of Deepak Nitrite stood at Rs. 237.91 Crores.
It means Deepak Nitrite had a Reserve Surplus (Net Worth – Equity) of Rs. 227.45 Crores.
And during FY 2010 – 11, the company had a Total Debt of Rs. 59.58 Crores.
Having the Reserve Surplus higher than the Total Debt meant that the question of Deepak Nitrite defaulting on its loan went right out of the window.
By FY 2014 – 15, the Total Debt on Deepak Nitrite stood at Rs. 544.51 Crores.
During the same period, the company’s Net Worth (Equity + Reserve Surplus) stood at Rs.346.83 Crores.
Just by looking at the Net Worth and Total Debt of Deepak Nitrite, some might find it concerning. But as the company’s total borrowing went up, so did the EPS and ROCE.
It meant the company was utilizing its borrowed capital to generate more revenue. And that is what we want.
And by FY 2019 – 20, the Debt to Equity ratio of Deepak Nitrite went down to 0.12.
A Debt to Equity ratio below 1 means the company has more Share Capital than Debt.
*Sometimes, the value of the Debt to Equity ratio is represented in the percentage format. 100% means 1. Anything below 100% is good.
Deepak Nitrite, a company with growing Revenue and EPS, regular Dividend payer, and good Profitability ratios – was bound to succeed.
That was it.
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