LIC raises stake in Navin Fluorine International by 0.24%, now holds over 5%

The insurance behemoth disclosed in a regulatory filing on Tuesday that it bought 1.21 lakh shares of Navin Fluorine International on January 08 at an average price of ₹3,630.39 apiece. As a result of this transaction, LIC’s overall stake in Navin Fluorine International crossed over 5%, reaching 5.04%.

Also Read: LIC-backed multibagger small-cap stock hits record high

Navin Fluorine International primarily focuses on fluorine chemistry, producing refrigeration gases, chemicals, inorganic bulk fluorides, and speciality organofluorines. It also offers contract research and manufacturing services.

The company’s shares have been on a downward trend since May 2022, owing to weak demand and elevated Chinese exports. Over the last nine months, including January, the stock has fallen from ₹4,668 per share to the current value of ₹3,504, losing 25% of its value. Despite this substantial decline, the stock has retained a gain of 415% over the last five years and an impressive 6265% over the last decade.

Jefferies maintains a ‘hold’ rating 

In a recent note, global brokerage firm Jefferies said it expects a slowdown in company capex until the new MD establishes priorities after taking office. Leadership turnover remains elevated with the recent departure of the Head of Sustainability, it said. 

Given persistent demand challenges in the first half of CY24, the brokerage foresees a gradual scale-up of Navin’s new agrochemical facility, where 50% of the capacity remains uncontracted. It anticipates ongoing delays in delivery schedules and expects a normalisation in demand by the end of FY25E.

Also Read: Q3 Result Preview: Specialty chemical sector companies to witness another weak quarter, say analysts

Jefferies projects a more favorable outlook for CDMO (Contract Development and Manufacturing Organisation).  It said that the recent product deferrals to CY2024 are expected to expedite growth in FY25E, while a USD 40 million 3-year contract win from Fermion is anticipated to be a driving force behind growth in FY26E.

“The segment is lumpy, and the company’s strategy to target late-stage Phase 2 and Phase 3 molecules should help steer a faster ramp-up in the business, in our view. The management maintains guidance of reaching the US$ 100 million revenue target by FY26–27E, though this could be more gradual than earlier anticipated,” said the brokerage.

The brokerage has adjusted the FY24/25E EPS downward by 9%/7%, attributing it to a slower-than-anticipated recovery in chemicals demand and a year-on-year decline in CDMO in FY24E, and projects EBITDA growth of 39%/28% in FY25/26E.

It said that the company’s valuations remain premium to PI Industries and SRF. Therefore, it maintained its ‘hold’ rating on the stock with a target price of ₹3,425 apiece.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 10 Jan 2024, 11:36 AM IST