Hold Navin Fluorine International; target of Rs 1575: ICICI Securities

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ICICI Securities research report on Navin Fluorine International

Navin Fluorine International’s (NFIL) Q4FY20 EBITDA grew 28.7% YoY to Rs672mn driven by strong growth in specialty chemicals. We are a tad disappointed by the 310bps QoQ gross margin dip despite better mix. NFIL’s outlook on specialty chemicals is a positive surprise considering the capacity limitation. We see near-term headwinds in ref-gas and inorganic fluoride segments, but the impact on earnings should be minimal. Specialty chemicals capex announcement is critical for growth beyond FY21. HPP remains a new growth driver. We have increased our EPS estimates by 3% and 6% for FY21E and FY22E due to strong guidance on specialty chemicals.

Outlook

We increase our target price to Rs1,575 (earlier: Rs1,430) as we raise EPS multiple to 26x (from 25x). Downgrade to HOLD (from Add) on limited upside.

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