Navin Fluorine International Ltd. share price target

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...

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

Multiple levers at play; long-term story intact

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...

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...

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

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.

We initiate coverage with a BUY recommendation and value the stock at 38x of its FY24x EPS with a target price of Rs.3,930/share, implying an upside of 17%.

Progress in complex molecules to augur well