Target of Rs 3460 is set by Neutral Navin Fluorine International and Motilal Oswal.
In its research report dated November 01, 2023, Motilal Oswal advised a Neutral rating on Navin Fluorine International, with a target price of Rs 3460.
The study report on Navin Fluorine International by Motilal Oswal
Navin Fluorine (NFIL) reported EBITDA/PAT that was 29%/28% below the projected amount because of the Specialty Chemicals and CDMO businesses' weak QoQ performance. EBITDA margin decreased 150bp YoY to 20.8%, while gross margin remained at 57.2%. Due to economic challenges and order delays, NFIL lost around INR 1 billion in sales in the second quarter. Based on our estimation, sales at the typical level may have been between INR 5.5 and 5.7 billion. The primary reason for the Specialty Chemical segment's 2Q disappointment was the postponement of sales of two molecules from 2Q to 3Q, which was caused by manufacturing issues in Dahej. It's anticipated that they will generate revenue in 3Q. Additionally, NFIL is probably going to introduce five new compounds in the next quarter. The management is optimistic about the future development potential of this industry. The HFO facility had both scheduled and unscheduled shutdowns in 1Q, although it has now stabilized. It is intensifying after July 23. The R32 facility stabilized more slowly than anticipated, but management anticipates that it will operate at maximum efficiency starting in the third quarter. Pricing pressure for refrigerant gases kept having a negative effect on the industry.
Prospects
We reduced our revenue/EBITDA/EPS expectations by 14%/19%/27% for FY24 and by 11%/10%/18% for FY25 due to the underperformance in 1HFY24. We thus project a revenue/EBITDA/PAT CAGR of 27%/31%/23% for the period of FY23–25. The stock is now selling at 22x FY25E EV/EBITDA and 34x FY25E EPS of INR99. We arrive at our target price of INR 3,460 by valuing the business at 35x FY25E EPS. Regarding the stock, we still have a neutral rating.
No comments:
Post a Comment