Navin Fluorine Q3 Results Review - Postponement In Sales Of Key Molecules Plays Spoilsport: Motilal Oswal

Motilal Oswal Report

Navin Fluorine International Ltd. Ebitda/adjusted profit after tax in Q3 FY24 came in 40%/45% lower than our estimates due to subdued performances in the specialty chemicals/Navin molecular businesses YoY. Gross margin stood at 53.9%, while Ebitda margin dipped 12.5 % YoY to 15.1%.

The postponement of some key molecules and channel inventory destocking led to subdued performance in the quarter.

The specialty chemical segment disappointed in Q3 primarily due to the deferment of sales campaigns. Navin Fluorine added one molecule in Dahej, while four more are in the pipeline for Q4. Agro specialty capex and the capability capex both are on track to be commissioned within the given timelines and start generating revenues in FY25.

Navin Fluorine Molecular was the most affected by the postponement of sales for key molecules to FY25, which impacted revenue of the business. However, it has entered into a strategic partnership with a U.S.-based contract development and manufacturing organisation player, which would be mutually beneficial for both.

The management also announced CGMP4 capex of Rs 2.9 billion, with Phase-I outlay at Rs 1.6 billion expected to be commissioned by end-CY25.

Given the underperformance in nine months FY24, we cut our revenue/Ebitda/ earning per share estimates by 4%/17%/15% for FY24, by 8%/15%/18% for FY25 and by 5%/13%/16% for FY26. Subsequently, we expect a revenue/Ebitda/PAT compound annual growth rate of 14%/10%/6% over FY23-26.

The stock is trading at 48 times FY25E EPS of Rs 68 and 29.5 times FY25E enterprise value/Ebitda. We value the company at 35 times December- 25E EPS to arrive at our target price of Rs 2,950. We maintain our 'Neutral' rating.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.