Deepak Fertilisers and Petrochemicals Corporation shares increased by 13 per cent after the Delhi High Court verdict

The shares of Deepak Fertilisers and Petrochemicals Corporation (DFPCL) zoomed to reach 13 percent on Wednesday (8th July) in a weak market, as the Delhi High Court asked the government to resume the supply of gas to the company's Maharashtra plant, which was disconnected in May 2014. It  closed yesterday (7th July) at Rs 132.45 but touched a day high of Rs 149.70 in BSE's intra-day trade on Wednesday.

Earlier last year, on 15th May 2014 DFPCL informed BSE that, the supply of domestic gas to the Company's plant located at Taloja MIDC, in Raigad, Maharashtra had been stopped by Gas Authority of India (GAIL) and Reliance Industries (RIL), as per the order given by the Ministry of Petroleum & Natural Gas (MOPNG). DFPCL also informed that they had not received any prior notice from MOPNG regarding the stoppage of the supply of Natural Gas. They declared the order as arbitrary, unfair and discriminatory as well as approached the Hon'ble High Court of Delhi to seek appropriate remedial measures. After a long and arduous wait, the Delhi High Court on Tuesday (7th July) asked the government to resume the supply of gas to the DFPCL's Maharashtra plant.

The stock price of DFPCL showed a dismal performance over the last one year. The company made an open offer to acquire Mangalore Chemicals and Fertilizers (MCF) at  3310 crore rupees in April 2014. DFPCL was already holding 25.3 per cent stake in MCF and tried to acquire 26 per cent more after this acquisition, at Rs 63 per equity share. However, the other major shareholders in MCF, the Adventz Group-owned Zuari Agro (which holds  16.43 per cent stake) and Vijay Mallya ( who holds 22 per cent), jointly made an open offer with a higher offer price at Rs 68.55 per share. Hence, DFPCL lost the race to acquire a significant majority in MCF against this joint open offer. Meanwhile, the government too ordered stoppage of supply of natural gas to the company in May 2014. Due to such problems the net profit of the FY15 decreased by 72 per cent to Rs. 67.99 crore as compared to FY14.

We hope the verdict of the Delhi High Court will give some breather to its investors and one can expect some improvement in its financial performance.