In an earlier piece, I talked myself hoarse about Navin Fluorine and the early bets that Rahul Saraogi of Atyant Capital and Ashish Kacholia placed on it. Both stock pickers are beaming ear to ear at the magnificent gains that have effortlessly flowed from the stock.
Now, we have to consider the future prospects for the stock and whether it is still worth our while to consider buying it.
Satish Mishra and Deepak Kolhe of HDFC Sec have issued a report on Navin Fluorine in which they claim that the future prospects for the stock are very bright. This is what they say:
“Navin Fluorine (NFIL) reported stellar results with EBITDA growing at 129% YoY to Rs 317mn and PAT at Rs 232mn (+131% YoY). This was mainly because of higher realisation for R22 and better product mix in specialty chemicals.
Pickup in R22 prices is led by (1) The government banning the import of pre-filled cylinders, which pushed up demand from OEMs, and (2) 10% cut in domestic output of R22 in 2015 under the Montreal Protocol.
However, the big story for NFIL is yet to play out. The second round of capex for adding CRAMS capacity and a JV with Piramal Enterprises is near completion. We expect the share of specialty to rise to ~70% by FY18E vs. 50% in FY15. NFIL remains a net cash company even at the peak of its capex cycle and we expect FCF to turn positive from FY17E.
Robust growth, improving return ratios and a strong B/S will drive re-rating. Maintain BUY with a TP of Rs 1,800/sh (16x 12 months rolling forward EPS).”
So, the stock does look promising and we need to keep a close eye on it.