Buy Navin Fluorine Ltd for the Target Rs.7,200 by Emkay Global Financial Services Ltd
We recently attended the analyst meet of Navin Fluorine (NFIL), represented by MD Nitin Kulkarni and CFO Anish Ganatra. Discussions revolved around R32, CDMO, and the recent capex. The management highlighted i) commissioning of the 15kt R32 expansion project in Q3FY27 (expects added demand from R410a transitioning to R32/R454b), ii) its CDMO guidance for USD100mn by FY28 and its doubling by FY30 (capex in cGMP-4 phase-2 is at least 15-18 months away), iii) its USD40mn revenue target from its CDMO contract with Fermion, along with ongoing CDMO projects (involving >15 molecules already in the late-tocommercial stage) progressing well, iv) the specialty chemicals order-book visibility for FY27 remaining strong with ramp up in the dedicated portion of its agro-specialty plant (>Rs3bn) and MPP debottlenecking, v) the potential for larger capex for its immersion cooling fluid project with Chemours (Opteon), vi) AHF merchant sales of ~6-8kt from the newly commissioned 40kt capacity.
R32 plant on track to be commissioned by Q3FY27 NFIL is on track to commission the R32 plant (~15ktpa capacity) by Q3FY27. This capacity will also be used for manufacturing HFO blends (mainly R454b). The management expects ~4-5 months of R32 sales in FY27. It also expects R32 demand to remain healthy, led by incremental demand arising from the transitioning to R32/R454B from R410a. The mgmt expects R32 prices to be stable in the near-to-medium term, backed by healthy demand-supply dynamics. For NFIL, domestic R32 realization is higher than export realization (India’s R32 export realization remains lower than China’s). In AHF, NFIL is working on grades to supply the electronics as well as the solar industries and expects ~6-8kt AHF merchant sales from the newly commissioned 40kt AHF capacity.
Strong order-book visibility for specialty chemicals in FY27 In specialty chemicals, NFIL continues to focus on asset utilization, backward integration, and a novel process route. The FY27 order-book visibility for specialty chemicals remains strong, with ramp-up expected in Project Nectar with increase in plant utilization from ~50% currently to ~75% next year. Its MPP debottlenecking project remains on track to be commissioned by Q3FY27; to accelerate the ramp-up, NFIL plans manufacturing the molecule already manufactured in the debottlenecking capacity. The Opteon (immersive cooling fluid) project with Chemours is expected to be commissioned by Q1FY27 – per the management, this is a >USD3bn opportunity; if it picks up pace, the management plans expanding capacity (additional capex of ~USD150mn) after two years.
CDMO revenue guidance doubled to USD200mn by FY30 The mgmt reiterated its ~USD100mn revenue guidance for CDMO by FY28 (no additional capex needed); it has also guided for this doubling by FY30. NFIL has 15 molecules in the late commercial stage now, of which 3-4 are in the immediate commercial stage. The molecules are present in therapeutic areas like respiratory, cardiology, oncology, etc.
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