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Dolat Capital Report
Navin Fluorine International Ltd.'s Q2 FY24 performance was weaker than estimates (Ebitda/ profit after tax at Rs 983 million/ Rs 606 million; plus 5%/+5% YoY) on ~Rs 1 billion sales impact due to deferrals.
Ebitda margin drops to 20.8% versus 25% plus average margin over last six quarters on adverse operating leverage; to recover as deferred revenue is recouped.
Navin Fluorine's working capital efficiency improved significantly (core working capital days down to 94 versus 138 in FY23, on reduction in inventory and restricting credit) aiding stable net debt at Rs 7.6 billion versus Rs 7.8 billion on March 31, 2023, though gross debt rose.
We revise our FY24/25 estimates lower to factor sales deferments/ losses and possible margin drop (versus earlier envisaged), and project delays, but maintain ‘Accumulate' with revised target price of Rs 4000 (versus 4200) at 35 times September 2025 earning per share.
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