Add Navin Fluorine Ltd For Target Rs 7,200 By Emkay Global Financial Services Ltd
NFIL’s Q4FY26 EBITDA of Rs3.2bn (EBITDA margin: 34.2%) beat consensus’/our estimates, on strong performance across verticals and better operating leverage. The management maintained annual EBITDA margin guidance of ~30% (±200bps). HPP vertical’s growth was led by better realization/volume, particularly in R32. Outlook on the specialty chemicals (SC) vertical remains strong, backed by strong order visibility and scale-up across existing molecules. Debottlenecking of the MPP and Chemours project will drive growth in FY27/28. The CDMO product pipeline remains strong, along with the ramp-up of cGMP-4; the company remains on track toward achieving its USD100mn revenue guidance by FY27. We trim FY28E EPS by 5%, to factor in normalization in R32 prices in CY27, partially offset by new capacity addition. We retain ADD with unchanged TP of Rs7,200 (roll over to 40x Mar-28E EPS).
High-performance product (HPP) segment continues to see healthy demand
The HPP business vertical reported strong revenue growth of 34% YoY, at Rs16.2bn in FY26, led by healthy volume growth and improved realization. However, the HPP segment saw sequential revenue decline in Q4 (+21% YoY/-5% QoQ) due to planned shutdown of the R32 plant (catalyst replacement) and lower shipments in the Middle East. Profitability in ref gas is stable despite the increase in raw material (sulfur and methanol) prices, as domestic demand remains strong. The new R32 capex remains on track for commissioning in Q3FY27. HPP segment growth over the next few quarters is likely to be driven by ramp up in AHF volume and commissioning of the R32 plant.
SC segment sees steady growth; order visibility remains strong
NFIL’s SC vertical posted FY26 revenue of Rs11.5bn (+44% YoY), on healthy performance in both existing and new molecules (13 new molecules in FY26). In ag-chem, volume has improved while prices remain subdued. On the back of volume recovery, the management has strong order visibility and expects ~80% SC capacity utilization in FY27. Ahead, SC segment growth is likely to be driven by increase in utilization of Project Nectar to ~70- 75% (to achieve this, it is working on qualification campaigns for adding more customers and on downstream applications of the molecule), debottlenecking of MPP capacity at Dahej in Q3FY27, and commissioning of the Chemours project in Q1FY27.
CDMO segment on track to achieve the FY27 revenue guidance of USD100mn
CDMO segment continued its strong momentum, seeing revenue growth of ~59% YoY to Rs5.5bn, on strong demand from Fermion and commissioning of cGMP-4. In CDMO, NFIL has a portfolio of 50-55 molecules with an approximately equal split between commercial and early-stage molecules. To further scale up the CDMO business, the mgmt is focusing on increasing footprint across therapeutic areas like oncology, respiratory, cardiovascular, neurology, animal nutrition, etc. Given the strong CDMO product lineup and ramp-up in cGMP-4, NFIL remains on track to achieve its revenue guidance of USD100mn by FY27.
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