Navin Fluorine - Building Margin Recovery; CDMO Visibility Encouraging: Nirmal Bang

Nirmal Bang Report

We recently visited the Dewas plant of Navin Fluorine International Ltd. and interacted with the management to understand the demand outlook and update on expansion plans. While the worst is not behind yet due to macro factors including China competition, margin is expected to improve sequentially from the current base. Contract development manufacturing organisation business is expected to clock $100 million revenue in FY27. 

The management indicated that total capex of Rs 14 billion is underway across four projects which could drive growth beyond FY26. CDMO peak revenue potential after cGMP4 commissioning is more than Rs 10 billion.

While the near-term pain points still persist, we believe recovery should be faster in Navin Fluorine vis-a-vis peers on account of very strong innovator revenue mix, speciality product positioning and the share of dedicated contracts.

The overhang related to the Managing Director’s appointment is also behind us. Therefore, after rolling forward our valuation to Sep’26E, we upgrade Navin Fluorine to Buy with a revised target price of Rs 4,000 (earlier Rs 3,600) valued at 35 times PE.

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