Neutral Navin Fluorine International; target of Rs 3,110: Motilal Oswal

Motilal Oswal recommended accumulate rating on Navin Fluorine International with a target price of Rs 3,110 in its research report dated May 08, 2024.

Broker Research

May 09, 2024 / 12:00 IST

Neutral

live

bselive
nselive

Volume

Todays L/H

Motilal Oswal's research report on Navin Fluorine International

Navin Fluorine’s (NFIL) EBITDA/PAT grew 13%/42% YoY in 4QFY24, higher than our estimates. The beat was driven by a strong performance in the Specialty Chemicals business, which was well supported by growth in the HPP segment. Gross margin was 50%, while EBITDA margin dipped 10.7pp YoY to 18.3%. The Specialty Chemicals business posted strong revenue growth of 26% YoY, led by higher utilization at the Surat plant and the addition of new molecules (one in Dahej and two in Surat). Management highlighted that it is much better placed with long term take-or-pay contracts with its customers. Currently, 80% of the revenue is contributed by the agrochemicals sector. NFIL anticipates launching 3-4 new molecules every year in this space.

Outlook

The Specialty Chemicals and Navin Molecular businesses should drive robust CAGR at 29% and 45%, respectively, over FY24-26, with increasing use of fluorine in the Pharma and Agro space, battery chemicals, and performance materials (Solar grid HF, Semiconductor grade HF, et al). The company has already identified various opportunities, such as 1) a capability capex in Specialty Chemicals with INR450m in revenue expected every year starting FY25, 2) Fermion contract with value of USD40m over three years (starting CY24), and 3) an additional R32 capacity to be commissioned by Feb’25, among others. We expect a revenue/EBITDA/PAT CAGR of 23%/34%/39% over FY24-26. The stock is trading at 38x FY26E EPS of INR89 and 25x FY26E EV/EBITDA. We value the company at 35x FY26E EPS to arrive at our TP of INR 3,110. We reiterate our Neutral rating on the stock.

For all recommendations report, click here