Navin Fluorine dips 16% in 4 days after MD resigns; Firm remains positive

Valuations are rich and hence, the brokerage firm Motilal Oswal Financial Services said it maintain Neutral rating on the stock owing to limited upside.

Shares of Navin Fluorine International (NFIL) continued to remain under pressure, and hit 52-week low of Rs 3,654.25. The stock was down nearly 5 per cent on the BSE in Thursday’s intra-day trade.

In past four trading sessions, the stock of commodity chemicals slipped 16 per cent after the company on September 28 informed that it's Managing Director, Radhesh R. Welling, resigned from the post for personal reasons. The resignation would be effective from December 15, 2023 and he would continue to serve the company till then ensuring smooth transition.

The stock of NFIL has fallen below its previous low of Rs 3,729 touched on September 29. In comparison, the S&P BSE Sensex was up 0.54 per cent at 65,577 at 09:37 AM.

In an exchange filing, NFIL had with the objective of further strengthening the Board, approved the appointment of Sudhir R. Deo as an Additional Director of the company with effect from September 28, 2023 pursuant to the recommendation of the Nomination and Remuneration Committee.

NFIL is engaged in the manufacturing of fluorinated specialty chemicals. As on June 30, 2023 the promoter group held 28.81 per cent equity stake in the company. NFIL operates in three major business segments, viz. HPP (High Performance Products), CDMO (Contract Development and Manufacturing Organisation) and Speciality Chemicals.

Meanwhile, shares of NFIL have underperformed the market in recent past due to weak earnings. In the past one year, the stock has declined 20 per cent as compared to 13 per cent rally in the S&P BSE Sensex.

However, NFIL doesn’t expect any material impact on the company’s existing relationship with customers or on the ongoing and future capex plans of the company due to change in leadership.

The Group intends to increase capacity utilisation in the new plants commissioned during the last financial year. NFIL anticipates a progressive cooling of commodity prices in 2024 on account of a looming global recession in key geographies, even as short-term volatility may persist.

The future capex plans will also remain unchanged despite change in leadership. Moreover, ongoing discussions with customers for future projects would also not be impacted and the company would continue to grow as guided earlier by the management.

Management expects peak revenue for the Agrochemical Intermediate to be achieved in FY24, and the MPP plant to be achieved in FY25. Two new molecules at the MPP plant are expected to be commissioned in CY23.

The HPP and the Specialty Chemicals segments will drive robust growth (at 33-36 per cent CAGR over FY23-25), with increasing use of fluorine in the Pharma and Agro space, battery chemicals and performance materials. The company has already identified various opportunities in the above mentioned spaces, according to Motilal Oswal Financial Services (MOFSL). Valuations are rich and hence, the brokerage firm said it maintain Neutral rating on the stock owing to limited upside. “We value the company at 35x FY25E EPS to arrive at our target price of Rs 4,245,” MOFSL said.