Neutral Navin Fluorine International; target of Rs 3460: Motilal Oswal

About this update from Navin Fluorine International Limited

Motilal Oswal's research report on Navin Fluorine InternationalNavin Fluorine (NFIL) reported 29%/28% lower-than-estimated EBITDA/PAT due to subdued performances in the Specialty Chemicals/CDMO businesses QoQ. Gross margin stood at 57.2%, while EBITDA margin dipped 150bp YoY to 20.8%. NFIL lost ~INR1b in revenue in 2Q due to macro headwinds and deferment of some orders. At the normal level, revenue could have been ~INR5.5-5.7b (in line with our est.) The Specialty Chemical segment disappointed in 2Q primarily due to the deferment of sales of two molecules from 2Q to 3Q led by production problems in Dahej. Revenue from these is expected to accrue in 3Q. Five new molecules are also likely to be launched in the ensuing quarter by NFIL. Management is confident that the segment is going to be a high-growth one in future. There were planned and unplanned shutdowns in the HFO plant in 1Q and the plant has now been stabilized. It is ramping up post-Jul’23. There was slower- than-expected stabilization of the R32 plant, but management expects the same to run at optimal utilization from 3Q onwards. Pricing pressure in Refrigerant gases continued to impact the segment adversely.OutlookGiven the underperformance in 1HFY24, we cut our revenue/EBITDA/EPS estimates by 14%/19%/27% for FY24 and by 11%/10%/18% for FY25. Subsequently, we expect a revenue/EBITDA/PAT CAGR of 27%/31%/23% over FY23-25. The stock is trading at 34x FY25E EPS of INR99 and 22x FY25E EV/EBITDA. We value the company at 35x FY25E EPS to arrive at our TP of INR3,460. We maintain our Neutral rating on the stock.For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Navin Fluorine International - 04 - 10-2023 - moti

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