MOSL: NAVIN FLUORINE (Neutral)-Margin rebounds, efforts are on to strengthen the same
NAVIN FLUORINE: Margin rebounds, efforts are on to strengthen the same
(NFIL IN, Mkt Cap USD2.3b, CMP INR3502, TP INR3875, 11% Upside, Neutral)
- NFIL reported a revenue and EBITDA in line with our estimates. Gross margin and EBITDA margin expanded 50bp and 100bp QoQ, respectively.
- Growth in 2QFY22 was driven by strong growth in the legacy business, especially in Inorganic Fluorides. Revenue in the CRAMS segment recovered to its quarterly run-rate of ~USD10m (as targeted by the management) after a dip in 1QFY22. NFIL raised prices in the Specialty Chemicals and Refgas business to offset higher input cost, with additional pricing action to follow.
- The management reiterated its efforts to maintain operating margin at current levels and move it up from here on. Over the next 2-3 years, it endeavors to move up the value chain (with the launch of a strong product pipeline and scale approved molecules from the pilot and laboratory stage). We expect an EBITDA margin of ~29% over FY23-24E (factoring in commissioning of the HPP/MPP project in 4QFY22/1HFY23), with the same recovering to 28.5% in 4QFY22 (v/s an already reported margin of 25.8% in 2QFY22).
- NFIL has launched two new products in the Specialty Chemicals segment, while the commentary on repeat orders in the CRAMS segment remains strong. The management is working on a strategy for debottlenecking its cGMP3 facility to boost growth. If approved, the same should be completed in six months.
Navin Fluorine International Limited is engaged in the chemicals business. The Company focuses on fluorine chemistry, producing refrigeration gases, some basic building block fluorides and specialty organofluorines. Its business units include refrigerants, which manufactures refrigerant gases under the Mafron brand; inorganic fluorides, which offers a portfolio of products that have applications in industries, such as stainless steel, glass, oil and gas, abrasives, electronics, pharma and agro, and specialty chemicals, which is engaged in manufacturing of fluorine-based molecules for applications in pharmaceuticals, agrochemicals and petrochemicals industries. Its principal products include hydrofluoric acid and other fluorine chemicals, synthetic cryolite, aluminium fluoride and fluorocarbon gases. It offers contract research and manufacturing services for custom chemical synthesis of fluorinated compounds for the pharmaceuticals, agro chemicals and specialty chemicals industries.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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