Navin Fluorine International Ltd.'s margin should improve gradually, led by an increase in revenue contribution from new and higher margin projects, according to Jefferies.
The brokerage upgraded its rating to 'buy' from 'hold,' and raised the price target to Rs 5,610 from Rs 4,235, implying an upside of 18%.
Jefferies said that the management expects fiscal 2024 margin to be marginally better than those of fiscal 2023, which were at an 11-year high of 26.5%.
"We forecast a 33% profit after tax CAGR over FY23–25—the strongest under our chemicals coverage," the brokerage said.
Navin Fluorine International Q4 ( Consolidated, YoY)
Revenue from operations rose 70% to Rs 697.1 crore (Bloomberg estimate: Rs 651.93 crore).
Ebitda rose to Rs 201.77 crore (Bloomberg estimate: 183.2 crore).
Ebitda margin stood at 28.9% vs 23% (Bloomberg estimate: 28.52%).
Net profit rose 81% to Rs 136.36 crore (Bloomberg estimate: Rs 124.07 crore).
Shares of the company declined 1.11% to close at Rs 4,695.40, after rising as much as 4.25% to Rs 4,950 intraday.
The benchmark Nifty 50 closed 0.46% higher.
Of the 18 analysts tracking the stock, eight maintained 'buy,' four remained neutral between 'buy' and 'hold,' four suggested 'hold,' and two analysts maintained a neutral stance between 'hold' and 'sell,' according to Cogencis data.
What Jefferies Says About Navin Fluorine:
Upgrades rating to 'buy' and raises price target to Rs 5,610 from Rs 4,235, implying an upside of 18%.
Forecasts 33% profit after tax CAGR over FY23–25—the strongest under its chemicals coverage.
Upgrades FY24 and FY25 net profit estimates by 13% and 21%, respectively, citing management's buoyant growth guidance.
Expects new high-performance products to substantially add to growth, given the company's small base.
Says earnings could compound in the high teens over the next decade.
Expects margins to improve gradually going forward as revenue contribution from new, higher-margin projects increases.
Management sees strong traction in CDMO and expects the current pipeline to translate into strong growth in FY24.
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