The brokerage has a price target of ₹5,250 on Navin Fluorine, which implies a downside potential of over 36% from Thursday’s closing price, which is among the lowest on the street for the stock.
Kotak’s bearish call comes after the management, at its analyst meet, retained its guidance for 20% – 25% revenue compound annual growth rate (CAGR) between financial year 2025-2030.
Navin Fluorine continues to have a confident outlook for its pharma contract development and manufacturing organisation (CDMO) business, while advanced materials are expected to scale up significantly over the longer term.
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Advanced materials, pharma CDMO in focus
The company expects the advanced materials business to scale up to ₹1,400 crore in revenue by FY35, while acknowledging near-term oversupply concerns in the Indian R32 market, the Kotak note said.
According to the brokerage, future capital allocation is expected to have a greater bias towards advanced materials because of the segment’s niche positioning and higher margin profile, although its asset turns are relatively lower than some of Navin Fluorine’s existing businesses.
The company expects to spend around ₹700 crore on capex in the current financial year, followed by ₹700 crore – ₹1,000 crore annually in FY28-29, according to the brokerage’s takeaways from its analyst meeting.
Potential Chemours expansion could require significant capex
Kotak also highlighted the potential implications of a larger-scale expansion by Chemours. If Chemours proceeds with such an expansion, Navin Fluorine could face substantial associated capital expenditure, after which management would need to evaluate the optimal financing structure.Such an expansion is expected to contribute meaningfully to revenues beginning in financial year 2031-2032, the brokerage said.
Most analysts remain positive
Despite Kotak’s Sell call, the broader analyst view remains positive. According to Bloomberg data, 23 of the 29 analysts with coverage on the stock gave it a “Buy” rating, two said “Hold”, and four gave “Sell” recommendations.
Shares of Navin Fluorine International fell up to 1.4% to ₹8,140.5 on Friday, but have since recovered some losses and are trading 0.3% lower at ₹8,232.5. The stock has gained close to 39% so far this year and nearly 65% over the last 12 months.
