Brokerage Anand Rathi is positive on Navin Fluorine's long-term performance considering investment in high-value businesses, strong orders in CRAMS, sound R&D product pipeline and the start of revenue from MPP and HPP in FY23.
It has maintained its Buy rating on the specialty chemical stock with a target price of ₹4,700 per share, implying a potential upside of about 25% from the current stock levels.
“Higher employee expenses (hiring to strengthen R&D, technology & design and business development teams) and other expenses, mainly energy and logistic costs, squeezed the EBITDA margin. The management said that better absorption of employee cost post-commissioning of ongoing capex and costs passed on would support margin expansion," Anand Rathi added.
As per another domestic brokerage house Axis Securities, although Navin Fluorine's Q4FY22 margins were weak, attributes such as the company’s healthy order book and new customer addition across segments, higher contribution from High-Value Business, strong product pipeline, shall aid in its growth momentum.
The brokerage has maintained its Buy call on Navin Fluorine shares with a target price of ₹4153 per share. Though, it sees slower-than-expected ramp-up in commissioning of the capex projects, volatility in raw material (RM) prices and forex, and delay in input costs pass through as key risks.
Shares of Navin Fluorine are up about 17% in a year's period, however, the stock has declined more than 10% in 2022 (year-to-date or YTD) so far.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
