Reduce Navin Fluorine International; target of Rs 3890: ICICI Securities

ICICI Securities research report on Navin Fluorine International

Navin Fluorine International’s (NFIL) Q1FY24 net profit dipped 17.5% YoY to INR 615mn despite revenue growth of 24% YoY and lower depreciation charges of INR 150mn. Honeywell supply plant had two months of lost sales due to shutdown and volatility in demand forecast; one molecule for agrochemicals had nil sales due to destocking. Honeywell supplies may be lower in FY24E due to lost production, and price drop from lower input prices with debottlenecking opportunity being pushed to FY26E. Two plants in specialty segment had expected near-peak output, base business is likely to grow from Q2FY24 after three quarters of sharp drop. In FY24, CDMO business to have normalised growth on a high base; however, entry into late-stage product wins ensures CDMO guidance remains unchanged. We have cut our EPS estimates by 4-8% for FY24E/FY25E assuming faster normalisation.

Outlook

Accordingly, we reduce fair value to INR 3,890 (from INR 4,050), valuing the stock price at 30x (unchanged) at FY25E EPS. Maintain REDUCE. Upside risks: 1) Large contract wins; and 2) higher-than-expected EBITDA margins.

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