Neutral Navin Fluorine; target of Rs 4525: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Navin Fluorine

Navin Fluorine (NFIL) posted an EBITDA and PAT, which were 40% and 42% ahead of our estimate, respectively, primarily led by ramp-ups in capacity and CDMO segment. Gross margin stood at 56.3%, while EBITDA margin expanded 520bp QoQ to 27.6% in 3QFY23. High Performance Products (HPP) and CDMO businesses grew strongly (up 63% and 74% YoY, respectively) as the company started commercial production from three of its plants, while the Specialty Chemicals business grew 22% YoY in 3QFY23 fueled by strong partnerships and great technology platforms.  Management highlighted that NFIL would start production of two molecules in 4QFY23 and one molecule in 2HCY23 in the MPP plant and expects optimum utilization by end-FY24. NFIL has already started work on debottlenecking of the capacity in its HFO plant, which would increase its capacity by 20%. That being said, the management has also cautioned against some headwinds in 2HCY23 that could be seen in the HFO business due to recessionary fears in the US (if at all) as well as some agrochemical molecules getting hit by inventory buildup (because of a drought in Brazil last year). We expect an EBITDA margin of 26-28% over FY23-24, factoring in the commissioning of various margin-accretive molecules. Given the outperformance in 3QFY23, we raise our FY23E revenue/EBITDA/EPS by 5%/ 12%/9%, respectively, with the company expected to achieve its quarterly run rate of USD10m in the CDMO business in FY23, among other things.

Outlook

We expect a revenue/EBITDA/PAT CAGR of 35%/39%/36% over FY23-25, respectively. The stock is trading at 39x FY24E EPS of INR109 and 27x FY24E EV/EBITDA. We value the company at 35x Dec’24E EPS to arrive at our TP of INR4,525. We maintain our Neutral rating owing to limited upside.

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Navin Fluorine - 09 -02 - 2023 - moti