Shares of Navin Fluorine have been struggling at the bourses ever since its managing director Radhesh R. Welling tendered his resignation. However, analysts at HDFC Securities still hold their bullish stance on the stock.

The Navin Fluorine Analyst: The Nilesh Ghuge-led analyst team at HDFC Securities maintained their “buy” rating for the stock with a target price of ₹5,368. The price target indicates an over 40% upside from the stock’s last closing price of ₹3,695.30.

The Navin Fluorine Thesis: The analysts said that in their assessment, Navin Fluorine is strongly positioned in three key business segments: High-Performance Plastics (HPP), specialty chemicals, and Contract Development and Manufacturing Organization (CDMO).

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The brokerage firm, in their note release on Thursday, added that the company’s operational structure, where each business vertical is led by its respective CEO, and supported by experienced senior management teams from various departments, is conducive to the company’s growth strategy. This approach enhances operational efficiency and decision-making within each vertical.

The analysts said that their positive outlook on the company is based on three key factors:

1. Earnings Visibility: The speciality chemicals player benefits from long-term contracts in the specialty chemicals and HPP segments, which provide a stable and predictable source of revenue. This long-term visibility in earnings is a favorable factor for the company.
2. Shift Toward High-Margin Business: As per the brokerage firm, the company is strategically transitioning its sales mix towards high-margin, high-value business segments. This shift is expected to enhance profitability and contribute to overall financial strength.
3. Capacity Expansion-Driven Growth: The company’s growth strategy is bolstered by capacity expansion initiatives. Increasing production capacity allows the company to meet growing demand and potentially enter new markets or segments, contributing to sustained growth.

Price Action: Navin Fluorine’s share price was up 0.88% to trade at ₹3,728 in the early hours of trading on Friday.

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