Neutral Navin Fluorine International Ltd For Target Rs.9,460 by Motilal Oswal Financial Services Ltd
Growth momentum to sustain across key business segments Operating performance beats estimates
* Navin Fluorine International (NFIL) delivered robust performance in 2QFY27, with revenue growing 57% YoY, driven by broad-based strength across all business segments. High Performance Products (HPP)/Specialty Chemicals/CDMO revenues grew 50%/58%/78% YoY. EBITDA surged 66% YoY, led by pricing actions and operating efficiencies.
* NFIL’s outlook remains favorable, underpinned by its diversified business portfolio. The HPP segment is expected to sustain its growth momentum, supported by a favorable pricing environment and ongoing capacity expansions. Meanwhile, the Specialty Chemicals business is likely to maintain its strong growth trajectory, driven by robust order visibility in 2HFY27 and the gradual scale-up of its product pipeline across existing and new molecules.
* Further, the CDMO business is expected to sustain its growth momentum, supported by positive developments across pipeline molecules and the commissioning of Phase 2 of the CGMP-4 facility, which is expected to become operational by the end of 4QFY27.
* On the back of a strong performance, we increase our FY27/FY28 earnings estimates by 8%/10% and reiterate our Neutral rating on the stock with a TP of INR9,460 (40x FY28E EPS).
Robust 2QFY27 performance across all business segments
* NFIL reported revenue of INR12b (est. INR10.3%), up 57% YoY, driven by growth across all three segments.
* Gross margin stood at 57% (down 190bp YoY), while EBITDA margin stood at 34.2% (32.4% in 2QFY26), driven by a favorable product mix and operational leverage.
* EBITDA stood at INR4b (est. INR3.4b), up 66% YoY, and adj. PAT grew 81% YoY to INR2.7b (est. INR2.1b)
* HPP revenue grew 50% YoY to INR6b, driven by higher volumes and improved realizations, while the pricing environment for HFC remained constructive.
* Specialty Chemicals revenue grew 58% YoY to INR3.5b, driven by 63% growth in the international business and strong scale-up across existing molecules.
* The CDMO business sustained its growth trajectory, with revenue growing 78% YoY to INR2.4b, driven by an increasing demand for existing molecules and continued deeper engagement with European CDMO majors.
* India/International revenue grew 64%/54% YoY in 2QFY27.
* In 1HFY27, revenue/EBITDA/Adj. PAT grew 51%/69%/93% YoY to INR22.4b/INR7.6b/INR5.1b.
* CFO stood at INR4.6b on Sept’26 compared to INR2.8b on Sept’25.
Highlights from the management commentary
* CDMO: NFIL has initiated Phase 2 of its cGMP-4 capex of INR1.3b, funded through internal accruals, with commissioning expected by 4QFY27. Engagement with the European CDMO major continues to deepen, supported by rising demand for an existing molecule and receipt of a qualification purchase order. The company is also expanding its presence across promising therapeutic areas, including oncology, cardiovascular, neurology, and animal health.
* Specialty chemicals: The business is expected to sustain its growth momentum, supported by healthy order visibility for 2HFY27 and beyond. The commissioning of the Dahej MPP capacity de-bottlenecking in Sept’26 and the upcoming Chemours project, targeted for completion by end-3QFY27, are expected to provide incremental growth opportunities
* HPP: The extension of the HFO supply contract with Solstice Advanced Materials by four years to 11 years increases the total contract value to ~USD590m, providing incremental revenue potential of ~USD180m. Further, the additional HFC capacity of up to 15,000 MTPA (R32) is on track for commissioning shortly, providing further growth opportunities. The pricing environment for HFC continues to be constructive supported by demand-supply dynamics.
Valuation and view
* We believe NFIL is well-positioned to sustain its growth momentum, supported by the constructive pricing environment, growing international exposure, robust order visibility, and operational leverage, led by capacity ramp-up.
* The outlook is further supported by:
1) a strategic partnership with Chemours to foray into high-growth advanced materials
2) planned investment for increasing the R32 capacity (likely to be operational soon)
3) Debottlenecking of the specialty chemical plant at Dahej
4) the ramp-up of the AHF plant
5) Phase II - cGMP4 on track to operationalize by end 4QFY27.
* We expect a CAGR of 31%/32%/35% in revenue/EBITDA/adj. PAT over FY26-28. The stock is trading at ~37x FY28E EPS of INR236 and ~24x FY28E EV/EBITDA. We value the company at 40x FY28E EPS to arrive at our TP of INR9,460 and we reiterate our Neutral rating
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