Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Navin Fluorine International Ltd (BOM:532504, Financial) declared an interim dividend of INR5 per share, reflecting strong financial health.
- The HPP business achieved a 23% growth in Q2 FY25, driven by higher R32 sales and better realization for R22.
- CDMO revenue increased by 41% year-on-year, with strong order visibility and firm orders for the second half of FY25.
- The company is making progress in product innovation, introducing new molecules at its Surat facility.
- Navin Fluorine maintains a robust financial framework with a net debt to equity ratio below 0.5, indicating strong balance sheet management.
Negative Points
- The specialty chemical business experienced a revenue decline of 15% due to cautious demand behaviors and competitive pressures globally.
- Operating EBITDA margin slightly decreased to 20.7% in Q2 FY25 from 20.8% in Q2 FY24.
- Profit after tax in Q2 FY25 decreased to INR58.8 crore from INR60.6 crore in Q2 FY24.
- The agro specialty plant at Dahej faced delays, with commercial production now expected by November 2024.
- Operating margin for H1 FY25 decreased to 19.9% from 22.1% in the same period last year, reflecting challenges in maintaining profitability.
Q & A Highlights
Q: What gives Navin Fluorine confidence in improved visibility for the specialty chemicals segment in the second half of FY25?
A: Nitin Kulkarni, Managing Director, explained that the confidence is based on firm orders and supply agreements for key molecules, not assumptions. These agreements cover not only Q3 and Q4 but also the calendar year 2025, providing a strong order pipeline for both Surat and Dahej assets.
Q: Can you provide insights into the CDMO business trajectory for the second half of FY25 and FY26?
A: Anish Ganatra, CFO, stated that the CDMO order book is strong, with expectations for at least a like-for-like Q3 and a very strong Q4. The business is witnessing higher levels of customer inquiries, and the company is optimistic about continued growth into FY26.
Q: What is driving the domestic revenue growth in the specialty chemicals segment, and is there a shift in focus?
A: Anish Ganatra, CFO, clarified that the domestic revenue growth is opportunistic, driven by old molecules and local customer supplies for global players. The focus remains on agrochemical and fine chemicals, with strong order visibility for Q3 and Q4.
Q: With optimal capacity utilization in HPP, will growth be driven only by pricing until new capacities come online?
A: Anish Ganatra, CFO, mentioned that while new R32 capacity is expected in Q4 FY25, there are ongoing efforts to debottleneck and increase capacities. Growth will be driven by both pricing and volume.
Q: Can you provide guidance on the growth outlook for CDMO and specialty chemicals for FY26?
A: Anish Ganatra, CFO, stated that while specific guidance is not provided, the company expects year-on-year growth in specialty chemicals based on current order visibility. The CDMO business is also expected to grow strongly, driven by late-stage and commercial molecules.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
