Navin Fluorine International Limited saw its shares decline by nearly 2 percent to Rs 3,378 in early trading on November 1, following a downward revision of its target price by global brokerage firm Jefferies due to lackluster performance in the September quarter.
Jefferies has issued a ‘hold’ recommendation for the stock and set a target price of Rs 3,165 per share, indicating a potential downside of 7.5 percent from the closing price on October 31. This marks a reduction from the previous target price of Rs 3,625.
As of 9:20 am, the shares were trading at Rs 3,388, down 1.5 percent from the previous day’s close on the NSE. Over the last six months, the stock has witnessed a 30 percent decline.
The brokerage firm cited widespread weaknesses, including product deferrals and execution challenges, as the primary reasons for lowering the target price. It also suggested that the management might consider raising equity capital to mitigate balance sheet risks and support capital expenditures.
During the quarter, the manufacturer of refrigerants and fluorides reported a net profit of Rs 60.6 crore, representing a marginal 4.8 percent increase compared to Rs 57.8 crore in the same quarter the previous year. However, the company’s income fell short of Bloomberg’s estimate of Rs 68.5 crore.
The revenue from operations for the company increased by over 12 percent to Rs 472 crore, but this result fell below Bloomberg’s estimate of Rs 525 crore. In the corresponding quarter of the previous year, the company had reported revenue of Rs 419 crore.
Navin Fluorine International explained that sales fell below expectations primarily due to the slower stabilization of the R32 plant and production-related issues that affected the HPP plant at Dahej, leading to the deferral of sales for two new products.
While EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 5 percent to Rs 98 crore in the quarter, it also missed analyst estimates of Rs 125 crore. The company’s margins declined to 21 percent from 22.4 percent, representing a year-on-year decrease of about 153 basis points.
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