SRF, Navin Fluorine earnings at risk after Morgan Stanley warns of refrigerant price pressure

About this update from Navin Fluorine International Limited

Brokerage firm Morgan Stanley has reiterated its 'Underweight' rating on both Navin Fluorine International Limited and SRF Limited. The brokerage said India's R-32 footprint is set to more than double this year, which could weigh on pricing. It expects R-32 prices to decline around 25% from last year's peaks, though they are likely to remain above marginal cash costs. Morgan Stanley believes Navin Fluorine and SRF are among the most exposed to refrigerant price volatility and has therefore maintained its 'Underweight' stance on both stocks. However, it added that lower tariffs could partly cushion the impact of softer prices. Refrigerant gases account for nearly one-third of earnings for both companies. The brokerage estimates that a $1 per kg reduction in margins could impact EPS by 8% to 13%. Despite the cautious view, analyst sentiment remains skewed towards the positive. Of the 29 analysts covering Navin Fluorine, 23 have a 'Buy' rating, two recommend 'Hold', and four have a 'Sell'. Among the 35 analysts tracking SRF, 22 maintain a 'Buy' rating, six suggest 'Hold', and seven recommend 'Sell'. Shares of Navin Fluorine International Limited settled 1.95% higher at ₹6,653, while SRF Limited ended 2.38% lower at ₹2,625.10.

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