Analysts expect the new order to add nearly ₹100 crore to the operating profit.
The stock of Navin Fluorine International has shot up by nearly 27 per cent in two trading sessions after the company bagged ₹2,900-crore multi-year export order. This improves revenue visibility for the company which clocked ₹1,030 crore in FY19 topline. In addition, it has minimal exposure to raw material sourcing from China, which reduces the impact of Covid-19 on its performance.
The company operates in the fluorochemicals segment. Its revenue and operating profit grew by 15 per cent and 22 per cent, respectively, annually in the past five fiscals thanks to the rising contribution of high-margin contract research and manufacturing services.
As a part of the latest seven-year contract, the company will supply high-performance fluorochemicals and revenue from the order will start reflecting from the last quarter of FY22.
Analysts expect the new order to add nearly ₹100 crore to the operating profit. The company will invest ₹365 crore to set up a new manufacturing facility to supply products for the new order using a mix of internal accruals and debt. The company has been debt-free for the last three fiscal years. The company expects the asset turnover of the new facility to be 1.2 times with a payback period of 4.5-5 years.
After the rally over the past two days, the stock’s price-earnings multiple has soared to 33 times one-year forward earnings compared with 24.3 at the beginning of February.
