Navin Fluorine International Ltd. share price target

Deal win fuels NFIL's growth trajectory

Multiple levers at play; long-term story intact

Furthermore, factoring in the sharp correction in prices and a fair earnings visibility, we upgrade the stock to BUY (earlier HOLD) with an unchanged TP of Rs 3,930/share

fluorochemicals complexes in India with a presence in speciality chemicals, CRAMS, inorganic fluoride and refrigerant segments. Q2FY22 Results: Numbers were almost in line with our estimates. The poor growth from CRAMS was negated by growth from speciality chemical and inorganic fluoride. Gross margins remained almost flat at 55% while EBITDA margin contracted 360 bps YoY to 24.8%, due to higher operating cost such as employee (up...

Navin Fluorine International’s (NFIL) Q2FY22 EBITDA dip of 10.6% YoY shows it was walking a tight rope on revenue growth with limited capacity in specialty chemicals, and volatile CRAMS revenue. NFIL is also catching up with peers and is accelerating investment in capabilities by adding a technology team and expanding R&D. Company is in a sweet spot to monetise fluorination opportunities, but the evolution would be gradual compared to impatient market expectations.

We maintain our HOLD recommendation with the target price of Rs 3,930/share, valuing the stock at a multiple of 38x FY24E EPS.

Navin Fluorine (NFIL) reported a marginal miss on revenues (-5% est.), although EBITDA was 11% below our estimates, weighed by higher other expenditure. Thus, despite gross margin expansion of 200bps QoQ to 55%, the EBITDA margin contracted 120bps QoQ to 24.8%. The management has highlighted that the gross margin is likely to be under pressure as one of the key raw materials saw a significant price increase in 1QFY22 which is likely to continue for another quarter. Furthermore, a large mineral mine was closed down due to labor issues and is expected to resume...

The company has two manufacturing facility in Surat and Dewas while it is setting up a new greenfield capacity at Dahej In terms of revenue contribution, speciality chemical constitutes 40% of overall revenue followed by CRAMS of 25% and rest from refrigerant (~18%) and inorganic fluoride (~17%) businesses Q1FY22 Results: Revenue was almost in line with our estimates while PAT came...

Firmly on track to achieve next leg of growth

The sharp stock outperformance in the near term has caused valuations to rise beyond its 3/5yr avg and we would await a better entry point and thus downgrade the stock to HOLD (from a previous BUY) while valuing the stock at 38x FY24E EPS to arrive at a TP of Rs 3930/share.