Reduce Navin Fluorine; target of Rs 3400: Emkay Global Financial

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Emkay Global Financial's research report on Navin Fluorine

NFIL’s Q1 revenue was up 14% YoY at Rs5.2bn (-13% QoQ), owing to i) volume recovery in the HFO plant (YoY) and higher volumes/pricing-in the ref gas business; ii) lower contribution from the specialty chemical business due to inventory rationalization in the agrochemical market (the mgmt expects recovery from H2), and iii) stable contribution from the CDMO business, with focus on late-stage molecules. EBITDA was below estimates, at Rs1bn (down 12% YoY and 9% QoQ), with margin at 19.2% (vs. 23.3% YoY) on reduction in gross margin and operating deleverage. We cut FY25/26E EPS by 7%, to build in lower revenue expectations from capex of Rs5.4bn.

Outlook

We increase our target multiple to 35x, given certainty on the leadership (new MD hired). We retain REDUCE on NFIL, and revise up our TP to Rs3,400/sh (35x Jun-26E EPS).

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Navin Fluorine - 310724 - emkay