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Motilal Oswal Report
A part of the Padmanabh Mafatlal Group, Navin Fluorine International Ltd. is one of the largest manufacturers of specialty fluorochemicals in the country. It has three business segments, viz., high performance products, specialty chemicals, and contract development and manufacturing services.
Navin Fluorine operates one of the largest integrated fluorochemicals complexes in India with manufacturing locations at Surat and Dahej in western India and Dewas in central India.
We visited the company’s Dahej plant on April 20, 2023, followed by a management meeting. Here are our valuation and views
The HPP and the specialty chemicals segments will drive robust growth (at 33- 40% compound annual growth rate over FY23-25E), with increasing use of fluorine in the pharma and agro space. The company is already receiving new orders.
Management expects peak revenue for: the agrochemical intermediate to be achieved in FY24, and
the multipurpose plants to be achieved in FY25. Three new molecules at the MPP plant are expected to be commissioned in CY23.
The stock is trading at 35 times FY25E earnings per share of Rs 134, with an expected improvement in return ratios to 22-24%, despite a huge capex (Rs 10.6 billion over the next three years).
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