Navin Fluorine Q1 Results Review - Focusing On Sustainable Growth, Expansion: Motilal Oswal

Motilal Oswal Report

Navin Fluorine International Ltd. is focusing on its 3P – Products, Platforms, and Partnerships – strategies to drive growth, expand into agro intermediates, and boost its capabilities in specialty chemicals. The company’s investments include a new HF plant and R32 capacity expansion to meet the rising demands in renewables and EV sectors.

Conversely, in contract development and manufacturing organizations, Navin Fluorine International aims to launch new products and partnerships to enhance operations and revenue from the food and drug administration-approved molecules with fluorinated compounds.

In FY24, Navin Fluorine International revenue declined 1% YoY to Rs 20.7 billion, while Ebitda declined 28% YoY to Rs 4 billion and earnings decreased 39% YoY to Rs 2.3 billion due to deferred CDMO approvals and slower growth in specialty chemicals. While specialty chemicals grew 14% YoY, high performance product encountered pricing pressures, and a 40% revenue decline in the CDMO segment led to a lackluster performance for Navin Fluorine.

The specialty chemicals/molecular businesses are projected to report 29%/45% compound annual growth rate over FY24-26, driven by the increased use of fluorine in various sectors.

We expect a revenue/Ebitda/profit after tax compound annual growth rate of 23%/34%/39% over this period. The stock trades at 40 times FY26E earning per share; reiterate neutral with a target price of Rs 3,555 (based on 40 times FY26E earning per share).

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