The Reasons Behind SRF and Navin Fluorine's Price Rally

The Reasons Behind SRF and Navin Fluorine's Price Rally

SRF and Navin Fluorine Surge Amidst Global Refrigerant Price Hike

In an exciting day for the stock market, SRF Limited and Navin Fluorine International saw their share prices soar by nearly 14% on Thursday, January 9, 2025. The rally was fueled by a sharp increase in global refrigerant gas prices, which is likely to boost earnings for specialty chemical manufacturers.

Key Highlights

1. SRF Share Price Rally

  • SRF started trading at ₹2478.05 on the BSE, a 1.38% jump from the previous day’s close of ₹2350.90.
  • The share price reached a high of ₹2678.95, marking an impressive 14% gain during the day.

2. Navin Fluorine Share Price Surge

  • Navin Fluorine began trading at ₹3579.30, up from its last close of ₹3489.45.
  • The stock peaked at ₹3974.15, reflecting a significant 14% increase.

3. The Catalyst: Rising Global Refrigerant Gas Prices

  • A major US distributor raised concerns over severe supply constraints of R32 and R125, essential refrigerant gases used in the HVAC (Heating, Ventilation, and Air Conditioning) industry.
  • The sharp rise in global refrigerant gas prices is expected to benefit SRF and Navin Fluorine, as both are key players in the specialty chemical sector supplying these gases.

Analyst Insights

Positive Outlook on Navin Fluorine

  • According to analysts at Prabhudas Lilladher, Navin Fluorine is positioned for significant growth:
    • Strong order book for H2FY25 and FY26.
    • Plans to double revenues by FY28.
    • HFO plant utilization is at optimal levels, with robust demand for R32 refrigerant gas.
    • Expansion of R32 capacity on track for commissioning by February 2025.

Specialty Segment and CDMO Vertical

  • While the specialty segment has been weak, the outlook for consecutive periods is optimistic.
  • The CDMO (Contract Development and Manufacturing Organization) vertical underperformed in FY24 due to postponed sales but is expected to recover in H2FY25.
  • CDMO revenue guidance: $100 million by FY27.

Revenue and EBITDA Growth Projections

  • Analysts project:
    • 13% YoY revenue growth and 56% YoY EBITDA growth for Navin Fluorine.
    • 9.5% QoQ revenue growth and 10.3% QoQ EBITDA growth.

Conclusion

The price rally in SRF and Navin Fluorine underscores the importance of global refrigerant market dynamics on specialty chemical stocks. With strong demand, expansion plans, and an optimistic order book, both companies are positioned for sustained growth. Investors and analysts alike remain bullish about the future prospects of these market leaders.

Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Investors are encouraged to perform their own research or consult a financial advisor before making investment decisions.