Navin Fluorine: Firing up all the cylinders. Maintain BUY with Target Price of Rs 7000

We maintain BUY on Navin Fluorine (NFIL) with a target price of INR 7,000. NFIL’s strategy is to deepen wallet share within its existing customer base by leveraging its established marketing network, broadening its product portfolio, and building on long-standing client relationships, which will help drive growth across all business verticals. The CDMO business remains focused on select marquee global customers, with an emphasis on scaling revenues from commercial projects and late-stage molecules to secure more stable revenue streams, supported by its sustained engagement with leading innovator pharma clients. Concise to that, NFIL has commissioned cGMP 4 phase 1 with capex of INR 1.6bn. HPP business and Speciality chemical business will be led by deepening relations with existing customers and ramp-up in facilities. Changing global supply chain dynamics and incremental capex in the refgas business will help in ramping up the HPP business. We expect revenue to increase from INR 23.49bn in FY25 to INR 48.33bn in FY29, fuelled by growth across all business verticals. EBITDA is expected to improve from INR 5.3bn in FY25 to INR 14.41bn in FY29 while EBITDA margins are expected to improve by 711bps to 29.8%, supported by inflection in the CDMO business and improved realization in refgas business with support of backward integration in AHP. Currently, the stock is trading at FY26/FY27/FY28 55.3/41.0/35.9x.

NFIL in a sweet spot in HFC R32; expanding capacity at the right time

NFIL has ramped up the supply of HFC R32, with the export of the same increasing to ~3,300MTPA in H1FY25. The global demand supply mismatch has led to price elevation in R32 and exports for NFIL. We expect prices to remain elevated, given changing global supply chain dynamics in the refgas business. The near-term growth will be mainly led by volume ramp-up at the existing plant. India has a supply surplus of R32, which has an opportunity to be used not only as pure HFC gas due to its lower GWP but also for making blends with lower GWP HFO/HFC. Both developed and developing nations will move toward lower GWP HFC/HFC blends and HFO due to supply cut as per the Kigali amendment. The global supply chain dynamics (supply cut) will play crucial roles in driving fundamentals of domestic refgas players. NFIL is in a sweet spot to capitalize the opportunity while focusing on volume growth. Capitalizing on the upcoming opportunities, NFIL has announced incremental capacity equivalent to 15,000MTPA of R32 GWP. The plant is expected to be commissioned by Q3FY27 and drive further inflection in the refgas business.

NFIL is also focusing on new technologies in cooling business. It has entered an agreement with Chemours for immersion fluid technology which is expected to be commissioned in H1FY27. The two-phase immersion cooling fluid technology is a proprietary technology of Chemours and at the testing level. NFIL will absorb this technology. An investment of INR1.2bn (of which INR0.8bn by NFIL) is a strategic investment for the company. This fluid is used in data centers and advanced AI next-generation chips for cooling.

Deepening pockets of existing customers

NFIL’s strategy is to focus on increasing wallet share with existing customers. Fluoro-specialty chemicals and CDMO operations continue to be anchored by three key customers — Bayer Crop Science, Corteva Agriscience, and Fermion. The share of these three customers in exports has risen to 80% in 1HFY26 from 63% in FY24.Over the past three quarters, the increase in contribution was driven by a notable shift in the mix with higher contribution from the pharma segment, led by Fermion, while Corteva drove momentum in the agrochemical portfolio.

To capitalize on the opportunity of commercialization of late-stage molecule NFIL has commissioned cGMP-4 phase 1 for a capex of INR1.6bn. The growth momentum in the business will be led by ramping up supply to major global innovators from cGMP phase 4 and strong pipeline of projects at remaining cGMP sites, namely cGMP 1, 2, and 3. NFIL expect to commission phase 2 of cGMP 4 in FY27, which will be led by commercialization of late-stage molecules. It expects revenue contribution from CDMO to reach INR ~9bn by FY28.

We expect speciality chemical business to be driven by ramp-up in project Nector. NFIL has improved visibility in speciality chemical business, and it has announced debottlenecking project for a capex of INR 0.75bn to be commissioned in Q3FY27. We believe revenue from total contracted and CDMO together will double to INR 20.70bn in FY28.

20% revenue growth (FY25-29E); EBITDA margin to expand 711bps (FY25-29E)

We expect revenue to increase from INR 23.49bn in FY25 to INR 48.33bn by FY29 at a CAGR of 20%. The growth will be led by firing up revenue growth across all the segments. CDMO business revenue is expected to increase to INR 10.7bn by FY29 at a CAGR of 33% over FY25-29. HPP business revenue is expected to increase from ~INR 12bn in FY25 to INR 22bn by FY29 at a CAGR of 15%. The spec chem business is likely to rise from INR 8bn in FY25 to ~INR 15.3bn by FY29 at a CAGR of 18%, fuelled by increased capacity utilization. EBITDA is expected to increase from INR 5.34bn in FY25 to INR 14.4bn in FY29, at a CAGR of 28%. The margins are likely to rise from 22.7% in FY25 to 29.8% in FY29. APAT is expected to jump from INR 2.89bn in FY25 to INR9.98bn in FY29, at a CAGR of 36.4%.

Disclaimer : This content is only for informational purpose. Do not make any investment based solely on this recommendation as it is not based on your unique risk tolerance and investment objectives. Investments in stocks are subject to market risks and other risks. There is no guarantee of the return that will be given.

Source: HDFC Securities Institutional Equities

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